Local shops & businesses on a ‘cliff edge’ as one in 10 face permanent closure without a successful Christmas trading period

• A new report reveals local shops and businesses are on a ‘cliff edge’ with one in 10 (11%) facing permanent closure without a successful Christmas trading period
• Local businesses, including shops, pubs and cafes, expect to take £2,164 less than usual this festive season. Almost one in 10 (9%) expect to take between £3,000-£5,000 less  
• The Christmas period usually accounts for 28% of annual takings on average and the most recent national lockdown has left many local business owners feeling underprepared 
• Overall there is a severe lack of confidence among local shop and business owners with over two thirds (69%) not confident about the future of their business
• With many fearing closures, 99% of local shops and businesses say it’s important for people to shop locally and support small businesses this Christmas.

Local shops and businesses are on a ‘cliff edge’ with one in 10 (11%) facing permanent closure without a successful trading period this Christmas, according to new research by small business insurer Simply Business.

Simply Business spoke to 230 local shop and business owners and found that a tenth (11%) will be forced to close permanently if they don’t bring in enough money this December, a further 14% would have to shut temporarily and 15% would need to consider other forms of employment. A third (32%) would need to put business plans on hold. 

Local shops and businesses, including pubs, cafes, retailers, market stalls and hairdressers, are expecting to bring in less money than usual this Christmas. On average, local business owners estimate they’ll take £2,164 less than usual this festive season, with one in 10 (9%) even expecting to take between £3,000-£5,000 less.

The study found that the Christmas period accounts for 28% of a local business’s annual takings on average, but for well over a tenth (14%) it can account for between 31- 40%. For almost one in 10 (8%), the festive period usually accounts for a whopping 61-70% of annual takings. 

With many facing closure, money was found to be the greatest worry felt by local shop owners and local businesses, with three quarters (75%) reporting it as their biggest fear going into the festive period. Half (50%) are also worried about future lockdowns and being able to reopen and well over a tenth (13%) are concerned about being able to keep employees on after Christmas.

Overall confidence levels

Overall, the study found local shop and business owners are severely lacking in confidence, with over two thirds (69%) not confident about the future of their business.

Despite government support, confidence levels also worsen the stricter the tier their local area is placed within. Over three quarters (77%) of local shops and businesses placed in Tier 3 restrictions don’t feel confident about the future of their business, compared to 57% of those placed in Tier 2, and a quarter (24%) of those in Tier 1. 

With this in mind, 99% of local shops and businesses say it’s important for people to shop locally and support small businesses when shopping for gifts this year.

Underprepared

The most recent national lockdown has left many local shop and business owners feeling underprepared for the Christmas shopping season. Over half (54%) have been unable to plan or budget due to the uncertainty, well over two fifths (46%) have been unable to attract or market to new customers, and almost one third (28%) have been unable to order stock. Over a tenth (12%) have also been unable to hire extra staff to help with the festive period.

As a result, businesses have had to pivot and make changes to help them better prepare for Christmas. Almost a third (28%) have increased their advertising, a fifth (18%) have set up an online delivery service and well over a tenth (14%) have set up an online store.

A further 13% of SMEs are now offering take away services and one in 10 (11%) are offering click and collect services. 

Alan Thomas, UK CEO at Simply Business, commented: 

“Small business owners have been hit harder than most in this most challenging of years. The impact Covid-19 has had on their livelihoods and wellbeing is huge, and December is shaping up to be another difficult month. 

“For many small businesses, the festive period is crucial to their annual takings – and with the frightening prospect of a quieter-than-usual December, one in 10 are on a cliff edge with permanent closure a real possibility.

“As we’ve seen on countless occasions throughout Covid-19, the self-employed are resilient, resourceful and innovative, and it’s encouraging to see many adapt their offering to help their chances – from offering takeaway services, to building online stores. But it’s clear that these steps can only go so far, and our research shows that success will be heavily linked to local restrictions.

“Small businesses are the backbone of Britain, and now more than ever it’s crucial we support them – by shopping with small and local businesses whenever we get the chance. With high streets officially reopening in Tier 1 and Tier 2 areas, this is a great opportunity for people to help support local communities. For those in Tier 3, using take-away services, small online businesses, and other safe delivery options can go a long way in supporting the self-employed.”