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Business Management Review | Saturday, December 03, 2022
The cost-of-living crisis, rising inflation and fears of a recession are creating considerable challenges for retailers and restaurants in the UK.
FREMONT, CA: According to a recent study, one of the top multi-category players in the world, the cost of living crisis, growing inflation, and concerns about a recession pose significant hurdles for retailers and restaurants in the UK.
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More than half (56 per cent) of firms believe they are ill-prepared for the future due to shifting consumer behaviour following the pandemic, which is further impacted by the current economic slump. In the UK, 32 per cent of firms are concerned about the challenge of declining consumer spending, while 80 per cent of enterprises worry about their future profitability.
Above 3,200 small and medium-sized food, grocery, and restaurant businesses in nine European and African markets (the UK, Spain, Portugal, Italy, Poland, Bulgaria, Kenya, Romania, and Morocco), 34 per cent of SMEs say finding new customers is their biggest challenge, and 25 per cent of UK businesses agree. This percentage is much higher in the two African markets surveyed, with 40 per cent in Kenya and 46 per cent in Morocco citing this as their top obstacle.
The study also revealed that 46 per cent of Spanish businesses are having trouble keeping up with the pace of change. Over half (58 per cent) of Moroccan businesses are concerned about their bottom lines, and 59 per cent said they lack the resources necessary to improve customer service.
Changes in customer behaviour, high inflation, decreasing consumer spending, and general macroeconomic risks led SMEs to look for additional help and solutions.
Consumer behaviour has changed significantly over the past two to three years. Two out of every three Italian enterprises claimed that their decision to digitalise was driven by the need to sustain business operations during the epidemic. Customers are increasingly more concerned about their digital experience than their in-person eating experience, according to 78 per cent of UK firms. While in Romania, 57 per cent of respondents claim that consumers are now more interested in digital than in-store encounters.
Nine of ten businesses have adopted new technologies to help them become more nimble, and one-third (33 per cent) of UK businesses consider digitalisation essential to growth. However, this may prove to be a difficult job given that 61 per cent of businesses in Spain and 63 per cent of enterprises in Portugal claim they were not digitised before the pandemic.
In terms of potential remedies, tech and innovation (41 per cent), marketing investment (50 per cent) and bettering the customer experience (45 per cent) are the top three priorities for UK businesses. Better customer comprehension is also required. 72 per cent of SMEs in Portugal cite direct consumer feedback as their primary information source.
Businesses in the UK are putting more emphasis on sustainability, with 40 per cent investing in environmentally friendly packaging options. Additionally, 85 per cent of consumers worldwide want to find more environmentally friendly options in the restaurants and stores.
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