Shrinking sales hit small retailers hardest

By Anna Jordan on Small Business UK - Advice and Ideas for UK Small Businesses and SMEs

Small retailers suffered the most from falling sales in July this year.

Accounting service, Xero, run a monthly index that aggregates data from the accounts of hundreds of thousands of small businesses, typically with less than £1m turnover.

The latest figures showed sales only grew by 4.5 per cent last month, significantly down from the 6.1 per cent and 20.8 per cent growth in June and May respectively. Increases typically came from price rises rather than additional sales. In fact, sales volume fell 4.3 per cent year on year in July.

Xero said small and independent retailers had been hit the hardest, with a fall in sales of 6.9 per cent compared with other industries last summer. Only small businesses operating in the information, media and telecommunications sector (+9.6 per cent year on year), administrative support (+13.3 per cent year on year) and rental, hiring and real estate (+9.0 per cent year on year) had faster nominal sales growth than inflation.

The huge problem of late payments is getting even worse. Those selling to other businesses had to wait 30.4 days to be paid in July, up by 0.4 days, with late payments rising 0.7 per cent to 8.3 days late when compared to June.

According to a separate Xero survey of large organisations, more than three in four (78 per cent) of late payment offenders admitted they are aware they are paying their suppliers late and understand the impact it can have on smaller businesses.

“It’s disappointing to see that many small firms are not being paid the money they’re owed on time,” said Xero’s UK sales director, Jo Copestake. “Most large businesses are fully aware of how delays in payments can impact their suppliers, limiting their ability to pay for bills, resources and staff.

“We’ve been advocating for some time now that we move away from calling this ‘late payments’, which legitimises poor practice and lacks urgency. It should instead be called ‘unapproved debt’ to highlight that this is a conscious hoarding of money that is owed to small businesses.”

Companies have also been struggling to keep up with increasing staff costs coupled with falling sales and more delay in payments. As a result, staff numbers are down 4.5 per cent compared with June last year, with manufacturing (-8.6 per cent) and construction (-8.9 per cent) shedding the most jobs. Despite the potential impact of the recent Commonwealth Games, the West Midlands job market reported the largest fall in jobs of any region at 6.7 per cent year on year.

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