For many small firms, especially those in the retail and hospitality industries, the Christmas period is critical for sales with a significantly greater volume of retail goods sold in the United Kingdom in December than in any other month. In 2022, this is forecasted to reach £82bn and should boost the fortunes of many local businesses.
This is also borne out by a recent survey by Quickbooks which showed that 82% of small firms in the UK stated that this year’s Christmas will be more important to their financial health than last year’s.
Another study also showed that one in five businesses will be making more than 20% of their annual revenue during this period alone. This is not surprising as spending by the average British family increases from the average of £2,500 for a typical month to £3,240 in December with a significant growth in book and music sales.
There is also a boost in food shopping at this time of year with spending on food and alcohol increasing by an average of 20% and 38% respectively, resulting in UK take-home grocery sales of £11.7 billion.
Yet as we face a cost-of-living crisis, high inflation and an economy that is now in recession, there is some worrying evidence that most small business owners in the UK expect to generate fewer sales this Christmas than during last year’s festive period.
For example, a study from Simply Business showed that 57% of small business owners in the UK expect to make less money this Christmas as compared to the previous year despite having no Covid restrictions in place with the biggest challenges being attracting customers, earning enough to stay in business and the impact of continuing supply chain issues.
The strikes by postal workers will also be having an impact on those retailers that are selling their goods online and may lead to cancellations of orders with an impact on future trading, especially for specialist firms – such as hamper companies – which may be highly dependent on Christmas trade for their annual sales.
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The one sector that may be benefiting this year are hospitality businesses, many of which will have seen their income boosted through the recent World Cup and will have been catering for Christmas parties over the last few weeks. Indeed, with no Covid restrictions in place, employers are looking to reward their staff for their efforts during the last 12 months with 81% saying this will be holding a Christmas party with half making up for the hiatus during the last two years by spending more on such celebrations.
In addition, nearly half of all businesses provide staff with an end-of-year bonus, predominantly for hitting company sales targets, improving profitability, and meeting personal goals.
There may also be some good news for smaller independent shops according to a recent survey from Nucleus Commercial Finance which showed that more people in the UK will be doing their Christmas shopping from such outlets as compared to previous years. The main reason for shopping locally seems to be a concerted effort to support independent retailers although saving money and buying better quality products are also important factors in this decision.
In addition, there has been a trend away from online shopping over the last year, with e-commerce declining every year in 2022 which could be down to the boost that local shopping has had from changes to employment patterns such as the growth of those working from home or co-working spaces which has boosted local economies across the UK.
So as we approach Christmas, take the opportunity to do your last minute shopping in those independent trading outlets in your local area and pop to your local pub for a festive drink over the next few days.
But also remember that these businesses not only need to be supported now but throughout the year and this will be especially important in 2023 as many local firms will be facing serious challenges because of rising costs and will need your support more than ever to survive these difficult times.
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