New
research from American Express reveals that three-quarters (75%) of small and
medium sized businesses (SMEs) are pivoting again in response to shifting
consumer expectations brought on by the challenging economic environment by
strengthening their customer relations and services.
As a result of rising
cost of living pressures, six in 10 (60%) of UK SMEs say that consumer
expectations are increasing, with over half (52%) stating customers are
increasingly driven by price, and over two-thirds (68%) reporting that
customers are looking for ways to cut back on spending.
The research, conducted
by Opinium on behalf of American Express and Small Business Saturday, found
that SMEs are proving agile in response to this challenge, most notably by
diversifying their customer offer (54%), improving customer communication
(37%), and providing additional services (30%). Around a quarter (23%) plan to
launch more special offers. Furthermore, exactly half of SMEs say they
are more focused on broadening their customer base rather than increasing
spending from existing customers.
Aside from the impact on
their customers, SMEs are also mindful of the ongoing effect of rising prices
on their own operations. More than half (52%) state that the rising costs of
goods, services and energy present the biggest challenge to the running of the
business in the next six months. Over a quarter (28%) are looking at additional
ways to improve their cashflow as a result.
However, overall, SMEs
are broadly confident about future prospects for their business. Three fifths
(61%) state that they expect a growth in sales over the next 12 months and two
thirds (66%) describe their business as being in ‘good shape’, highlighting the
resilience and optimism that these businesses are renowned for.
Amanda Salt, Vice
President for UK SME Sales, Global Commercial Services UK at American Express, said: “Our research highlights the
resourcefulness and flexibility that SMEs are rightly known for. With cost
pressures increasingly front of mind, they are evolving their approach in
response to heightened expectations from their customers. Those businesses
that scrutinise their operation, proactively take action to adapt to current
challenges, in tandem with going the extra mile for their customers, will
secure a competitive advantage.”
Michelle Ovens,
Director of Small Business Saturday UK, added: “This research underlines just how challenging things still are out
there for small businesses. After pivoting with incredible speed and
entrepreneurialism during the Covid-19 pandemic they are now adapting again to
a new set of circumstances. It is great to see such dynamism and positivity
from business owners. But with many small firms having little in reserve
following the pandemic, we need to support them now more than ever. People are
understandably looking closely at where they spend every penny, but they also
have a wider power with that spend. Shopping small and locally not only offers
greater value, but also represents a significant investment in our
communities.”
Additional findings from
the research include:
- SME decision makers say they are currently
“optimistic” (35%) and “hopeful” (31%) about the next six months for their
business. Over a third (36%) say that running a
business has become harder over the last few years
- To attract new customers in the months ahead,
a quarter of SMEs (25%) aim to increase sales and marketing activity
- Some 42% say they are taking steps to manage
overheads to help protect themselves against rising costs. But only 14% - or
around one in seven - say they are looking to cut back on investment as a
result of cost pressures.
ENDS
Notes
to Editors
ABOUT THE RESEARCH
All figures are based on fieldwork conducted by
Opinium on behalf of American Express. Fieldwork was undertaken between 27th
May-6th June 2022, amongst 1,008 SME senior decision makers, including more
than 200 at small businesses of 10-49 employees in the UK.
AMERICAN EXPRESS
Mike Berry
Mike.Berry2@aexp.com
FIRSTLIGHT
Rosie Stafford
+44 (0)7769 618500
rosie.stafford@firstlightgroup.io
ABOUT AMERICAN EXPRESS
American Express is a globally integrated payments
company, providing customers with access to products, insights and experiences
that enrich lives and build business success.
Learn more at www.americanexpress.com/uk and
connect with us on facebook.com/AmericanExpressUK, instagram.com/americanexpressUK, linkedin.com/company/american-express, twitter.com/AmexUK, and youtube.com/AmericanExpressUK.
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