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Frosty festive trading could force a tenth of small local businesses to close

Gaelle Walker
10 December 2020

Small shop and local business owners across the country fear that lower Christmas trade this festive season could drive their operations over a cliff edge, with 11% staring down the barrel of permanent closure. 

New research from small business insurer Simply Business reveals a “severe lack of confidence among local shop and business owners,” with 69% not confident about the future of their business.

On average small local businesses, including fashion and beauty retailers and hair and beauty salons, expect to take £2,164 less than usual this festive season and 9% expect to take between £3,000-£5,000 less.  

Unsurprisingly, 75% of local shop and business owners say that money is their biggest fear going into the festive period.

Lower levels of Christmas trade this festive season could drive 14% of owners to shut their businesses temporarily, while 15% might need to consider other forms of employment and 32% say they might need to put business plans on hold, the survey found.

On average the Christmas period usually accounts for 28% of annual takings, however for 14% of small business owners who responded to the survey it accounts for between 31- 40%, while for 8% it usually accounts for a 61-70% of annual takings.

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 24% of those in Tier 1.

The most recent national lockdown has also left many local shop and business owners unable to prepare as they normally would for the Christmas shopping season, with 54% saying they have been unable to plan or budget due to the uncertainty and 46% unable to attract or market to new customers.

Meanwhile, 28% say they have been unable to order stock.

However, small business owners have not rested on their laurels during the year of enforced closures with 28% having increased their advertising, 18% having set up an online delivery services, 14% having set up online stores and 11% now offering click and collect.

Simply Business UK chief executive officer Alan Thomas said: “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.”

Read our interviews with four independent retailers across the country on how they have been trading since Lockdown 2 was lifted in England here.

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