Shop small and shop online: changed consumer habits are powering micro-businesses
It comes as no surprise the nation’s GDP shrank by 1.5 per cent in the first quarter of this year. The third lockdown took its toll on businesses of all sizes. As the economy recovers, we need to steer the nation to smoother waters by supporting even the smallest of small businesses.
Micro-businesses make up 96 per cent of registered companies in the UK, account for 33 per cent of the workforce and 21 per cent of overall turnover. When we talk about reinvigorating SMEs, we are talking as much about the one-man-band in Wolverhampton as we are the start-up in the City. Micro-businesses are the engine of the UK economy and have the power to propel us to a strong recovery.
Increasingly, these businesses are online. Pre-pandemic, swathes of small companies were not as technologically literate as they needed to be to thrive. A year on, the story is very different. There has been a 21 per cent spike in new ventures in the last year, according to our State of the Nation study. The demand is there to ensure these businesses keep on growing online.
Consumer spending habits have and will continue to change. There has been an increased level of support for local, independent businesses. Recent research from Barclaycard showed that nearly two-third of consumers in the UK have chosen to buy from small, nearby stores since the start of the first lockdown. Nine in ten say they will continue to do so after all the restrictions have been lifted. People were increasingly aware of the benefit of having quality local shops near their home and did what they could to support them.
The most obvious and oft-cited shift is the massive transformation of shopping through digital channels. For every £10 spent, £3 of it is online, according to ONS figures. Online retail sales are nearly 60 per cent higher now than in February 2020.
As a result, micro-businesses who struggled to gain traction have an even greater opportunity to build a loyal customer base. By adopting e-commerce capabilities and increasing their online presence, independent businesses are able to reach a broad range of people and connect with them through social media.
The tech industry has responded to this by building easy-to-use and easy-to-manage digital platforms to integrate online marketplaces such as eBay with the social media channels where businesses build their base.
Britons around the country have supported their local shop, pub and restaurant. The tech industry has a wider responsibility to empower these micro-businesses as they buoy up the nation’s economic recovery. There needs to be a concerted effort to ensure platforms are as user-friendly as possible and our investment in small businesses is emotional as well as financial.