the retail sector

• Retail (including motor and wholesale) accounts for a substantial part of the South East economy, with 83,000 SMEs, over half of which are shops

• Retailers have seen

reductions in spend per customer during the recession, but not necessarily a drop in customer numbers

• The retail sector is confident

for its future. About 3 in every 4 retailers feels ready to take advantage of the upturn, and is expecting to survive the recent difficult conditions

• Confidence is especially high

among those with a website, a wide and/or loyal customer base, and wholesalers.

• The main challenges for

retailers are responding to competition and improving staff skills. Skills gaps vary depending on the sector. Customer Service is a general skills need, while the Motor sector in particular points to Sales & Marketing skills gaps.

Key Messages

South East Business Monitor Survey of Business Owners and Senior Decision Makers

About this research This paper focuses on the retail sector in the South East, including the motor trade and wholesale. There are around 83,000 retail SMEs (including sole traders) across the South East, employing around 567,000 people. More than half (56%) are in the "shops & stores" sub-sector. Recession and Recovery The retail sector has been affected similarly to all SMEs. 50% say they have been negatively affected by recession. Wholesalers and those in rural areas have suffered more (54%). Half (49%) are anticipating turnover growth in the coming 12 months, and 18% expect to take on staff in that period. Confidence of survival is high (78%), and retailers are more upbeat than other SMEs that they are poised for the economic recovery (72%). Attitudes to recession and recovery (%)

78

44

7278

50

68

0

20

40

60

80

100

I feel confident that mybusiness will survive the

recession

The recession will hitbusinesses in my sector

particularly badly

I think my business is wellplaced to take advantage when

the UK economy recovers

% of retail SMEs % of all SMEs

Source: South East Business Monitor, June-July 2009. Bases: xx

Those most confident for the future include: • Retail SMEs with a website • Those with loyal (repeat) customers • Wholesalers • Those with a wide customer base

Hot Topic Flashlight The Retail Sector August 2009

Hot Topic Flashlight: The retail sector

Winning and keeping customers Although only 24% of retailers have seen a drop in customer numbers over the past 12 months, 42% report lower spend by customers. Broadly, shops and stores have seen an increase in customers, with lower unit spend, while wholesalers and the motor trade have stable customer numbers, but lower unit spend. This could all result from the discounting activity which 53% of retailers have undertaken to respond to the downturn. Actions taken to respond to recession/ prepare for recovery Retail

SMEs (%) Used discounts and sales to attract customers 53 Used different methods of marketing or advertising 46 Sought cheaper suppliers 44 Invested in new or different types of stock 43 Implemented waste management activities to cut costs 36 Revised the business plan 31 Trained staff or investigated training options 20

Source: Business Link South East Business Monitor June-July 2009. Base: Retail SMEs= 360, All SMEs = 1,223.

The challenges facing retailers vary depending on whether the SME is part of a chain or wider group. For those that are, key challenges are; Responding to competition (65%), Improving staff performance/skills (64%), Reducing waste/improving energy efficiency (61%), developing management/leadership skills (46%) and recruiting skilled staff (40%).

Main skills needs identified by retail SME owners to help their businesses grow vary by sub-sector:

• Sales and marketing - esp for motor trade (48%) • Customer service for all sub-sectors (25%) • IT skills - especially for wholesalers (38%) • Finance/accounting esp for motor trade (27%)

Business Link’s retail expert, Kerry Kyriacou says: “This research shows a much more positive outlook from the retailers surveyed than we would expect during the current economic climate. These findings demonstrate the resilience of retail owners and their ability to adapt and change according to external economic influences. Business Link can help retailers identify areas of improvement, whether it be to attract more customers, increase the unit spend per customer or improve their stock turn. It is certainly worth retailers engaging with their local business adviser for a free business health check.”

For the full Retail Hot Topic Spotlight report

email: [email protected]

These are highlights of the findings from the South East Business monitor. Every four months, at least 1,200 telephone interviews are conducted with business owners and senior decision makers of small and medium –sized enterprises (SMEs), based in the South East. This allows an ongoing “temperature check” of business issues and concerns. The survey results are weighted to reflect the size and structure of the region’s SME population. For the full Hot Topic Spotlight report on the Retail Sector, email: [email protected] Other recent research reports include:

• Home based businesses • Green Opportunities for SMEs • Credit & Cash Flow • Stress in the Workplace • Public Procurement • Enterprise among the Over 55s • Women’s Enterprise