Over half of Brits have avoided shopping at small businesses due to high prices!

The ‘cost of living crisis’[4] has meant the prices for many essential goods in the United Kingdom have been increasing faster than household incomes. It has been wreaking havoc with many people’s finances for some time now, so how can small businesses encourage consumers to spend their hard-earned cash with them?

A recent study by Uswitch business credit card experts surveyed 2,000 consumers in order to help small businesses understand how customers perceive pricing and what they value most when it comes to products and services offered by small businesses. The findings indicate how small businesses can successfully balance competitive pricing with quality.

How has the cost of living crisis affected consumers and their disposable income?

Uswitch discovered that from Q1 2015 to Q4 2024, the Consumer Price Index (CPI) increased by a whopping 35.7%.[5]

They also found that monthly electricity bills increased by a whopping 161%[6] between 2015 to 2024, average rent prices increased by 44.6%[7] and UK average house prices increased by 41.3% [8] [9] in the same time period.

The cost of living increases don’t stop there, with recent government stats[10] revealing food and non-alcoholic drinks prices rose by 32.6% between 2014 and 2024, oils and fats increased 71.7%, and meat increased 23.2%!

With finances spread so thin, consumers are being more selective and discerning about where and how they spend their money.

How price-sensitive are customers and what drives their purchasing decisions?

Uswitch found that over 9 in 10 Brits (95%) said price influences their decision to shop at a small business. This highlights the fact that small businesses need to focus on competitive pricing to get customers to spend.

Table showing how price influences consumers’ decisions to shop at small businesses

Influences decision (Net)
94.75%
Very much
25.54%
A lot
28.89%
Somewhat
32.58%
A little
7.75%
Not at all
5.25%
However, 39% of Brits said they would be willing to pay more for a product or service from a small business compared to a chain. This accentuates the fine balancing act between keeping quality high and maintaining affordability, which business owners must achieve to be profitable.

Table showing to what extent consumers are willing to pay more for a product or service from a small business compared to a chain

Yes (net)
39.03%
Yes, absolutely – I prefer to support small businesses even if it costs more.
9.85%
Yes, within reason – I’ll pay a little more but not significantly higher.
29.19%
Yes, within reason – I’ll pay a little more but not significantly higher.
36.43%
No, not really – I usually go for the best price regardless of the business size.
14.29%
No, never – I always prioritise affordability over business type.
10.24%
No (Net)
24.54%
What do customers value most in relation to pricing?

The top three factors that Brits said make a product or service worth its price to them, are:

1. Quality (72%)

2. Convenience (40%)

3. Customer service (37%)