How SMEs can play to their strengths to thrive during this make-or-break period
The past 12 months have seen UK consumer spending met with challenge after challenge. Soaring interest rates have coincided with rampant inflation as the Consumer Price Index rose by nearly 7% between September 2022 and 2023.
Although they are facing the big squeeze, consumer sentiment has stayed consistent over the last six months, with signs of optimism when compared to this time last year.
Despite the rocky retail landscape of the past three years, one trend remains certain. The run-up to the festive season is the annual peak for consumer activity. As consumer confidence improves to its highest level in two years, it is crucial for small businesses to attract a healthy customer base and pull out all the stops to compete with their bigger retail counterparts.
SME payments partner, Tyl by NatWest’s recent Virtue of Value study outlines some of the key considerations for consumers when it comes to developing loyalty to a business and how SMEs can best position themselves during the upcoming consumer spending frenzy.
Black Friday’s green shoots
When looking at the bigger picture, much like the broader economy, the retail cycle follows a pattern of peaks and troughs. The immense revenue potential held by Black Friday and Cyber Monday present businesses with a crucial opportunity to offset the typical drop off in consumer demand that often follows in Q1. To sustain long-term growth, it is crucial for businesses to maximise revenue when possible, to ease the potentially harmful effects of slumps in consumer spending.
This year’s retail events are forecast to eclipse last year’s records, with 74% of consumers looking to take advantage of deals across November. The hype that has built around the event in the UK has created a false economy, as retail chains have in the past offered false discounts, with just one in seven deals proving to be genuine6.
A big opportunity for small businesses
Larger retailers’ ability to lower prices to outcompete the market goes a long way to attract consumers. However, this is not the be all and end all. Tyl by NatWest’s recent survey uncovered that almost half of UK consumers want to support their local small business owners.
Visiting a local store can often provide a more personal and often enjoyable shopping experience when compared to larger retail chains. Many larger retailers often take an online-first approach to Black Friday and Cyber Monday shopping in the UK. This does, however, provide SMEs an opportunity to play to their strengths. Many Brits prefer to shop in-store, particularly when purchasing gifts for others, with 47% of shopper stating face to face interaction with staff as a key factor.
Touches to help your business go the extra mile
As a small business, you can put in place a number of small touches to make customers feel valued, and it won’t necessarily cost a thing. A warm welcome has been revealed as the number one piece of feedback from UK consumers when it comes to what would make them return to a business. By expressing a genuine interest towards customers and accompanying any sales with some personality, you can ensure they leave your business with a smile on their face.
Complimentary samples, anniversary discounts and handwritten thank you notes are all simple yet effective ways for SMEs to let their customers know how much they mean to them. And it goes a long way when stores show they understand what their customers are actually looking for when shopping. Dedicated sections that appeal to specific demographics within the customer base, such as secret Santa gifts under £20, or a section solely for your mother-in-law, can be fruitful in helping drive sales and building consumer loyalty.
Word of mouth and reviews also prove to be invaluable tools to increasing sales. Over a quarter of shoppers check small business reviews before making a purchase, meaning these small steps can aid any business to develop a strong reputation within the community.
Poor service can, however, undo a business’ hard work when forging relationships. Maintaining a consistent and helpful experience for customers looking to return or exchange purchases is crucial, particularly around the festive period. Pricey shipping, delivery issues and prolonged dispute resolutions were earmarked as three of the key sticking points for consumers when it comes to developing a negative perception of a business. By being understanding and accommodating to your consumers during a period when time is of the essence, a small dose of compassion can go a long way to building a thriving customer base.
Seizing the initiative
By making the most of increased customer footfall and a greater appetite to spend, the run up to the festive period is a make-or-break time of year for small businesses. A little can go a long way when it comes to consumer engagement. It is vital that every customer purchasing your products has a positive experience. Because the short-term boost to your sales can also lead to a larger, more engaged customer base in the long run.
By putting into practice some simple, yet effective touches during peak consumer spending season, SMEs can outcompete larger retailers, and use their new-found loyal customers as a springboard to hit new heights in 2024 and beyond.