Small and medium size businesses operating in the retail sector are really feeling the bite of the credit crunch according to a new study released this week. Some 73 per cent of retail businesses in the study admitted that their suppliers are increasing their prices, 67 per cent said they are not expanding as quickly as they would like and half are actively looking to reduce their own costs.

With the ever-increasing dominance of the supermarkets and out of town retail parks, plus the heavy burden of business rates, small and medium sized retail businesses are feeling the pressures more than ever, according to research carried out by The Credit Show, the UK exhibition for the commercial and consumer credit industries.

However despite customer downturn and ongoing tough trading condition for retailers, many small and medium sized businesses (SMEs) are showing a bullish reaction to the credit crunch. When asked if they had to start their business again in today’s economic climate, 61 per cent said they would do it all again.

The study is based on detailed online interviews with 117 small and medium sized businesses. In general, the study paints a picture of an SME community in bullish mood. Just under half plan to expand into a new area in the next 12 months and a further 37 per cent will recruit new staff. When asked to state their future optimism 72 per cent of retailers said they were confident.

However, there is no doubt that some SMEs are feeling the pressure of the credit crunch. For instance when asked what changes their business had noticed in the last 12 months, the top response with 56 per cent was that suppliers had increased their prices. With other half of suppliers increasing their prices this will have a huge impact on the supply chain, affecting further businesses throughout the UK.

Despite being under pressure from suppliers, many feel unable to increase prices with their own customers, especially as many are facing weakening demand.

Kamala Panday, publisher of Credit Today, organiser of The Credit Show said: “For some, the credit crunch is beginning to bite. However this survey shows that their hunt for growth has not been affected, no more so than with the retail sector. Businesses are now playing a more strategic game, with over half admitting to chasing slower payers more vigorously.”

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