The anonymised and aggregated data from hundreds of thousands of small businesses showed that UK retailers experienced a 5.1 per cent drop in sales in October, while sales among the broader small-business economy rose by 4.6 per cent year-on-year (y/y), following a seven per cent rise in September.
This shows the stark situation for independent retailers as they enter their busiest time of year.
Alex von Schirmeister, UK managing director, said as the festive shopping period kicks off, independent retailers need support more than ever before.
“Despite the sales rise amongst small businesses, once adjusted for current high inflation (using the ONS Consumer Price Index [CPIH] of 9.6 per cent for October) sales actually fell 5 per cent y/y. That is, the rise in national sales was due to price increases rather than small businesses selling more goods and services,” he said.
The struggles of small retailers are further evidenced by a 6.6 per cent y/y decline in the number of people being employed in the sector, while wages rose 4.7 per cent y/y in October. This suggests that retailers are offering higher salaries to attract staff ahead of the festive season.
Mr von Schirmeister said last week’s autumn statement offered little respite for small businesses so they will be feeling the pressure to make up the current sales shortfall and manage recruitment challenges.
“We’re calling for immediate action from policymakers to ease the burden and provide some much-needed stability,” he said.
Last week, Xero unveiled a new report at the House of Lords that outlines a four-point plan to support small-business recovery, including policy recommendations for the UK government.
The latest index showed that small businesses in the North were hit hardest with the regions suffering the most including West Midlands (-7.6 per cent y/y), East Midlands (-7.3 per cent y/y), and the North West of England (-6.7 per cent y/y).
This pattern is similar when it comes to sales. London experienced the strongest growth (+7.3 per cent y/y), while Scotland (+3.1 per cent y/y), East Midlands (+3.5 per cent y/y), West Midlands (+3.9 per cent y/y), and Yorkshire and the Humber (+4.6 per cent y/y) experienced the lowest sales growth.
Meanwhile, the length of time small businesses wait to be paid rose by 0.6 days to 30.5 days in October. This is the sixth increase in payment times in the past seven months.
On average, late payments to small businesses by their customers increased again by one day, up to 8.3 days. Payments are the latest they have been since August 2020. Waiting longer to be paid puts additional stress on small-business owners as they navigate their own rising bills.
