Consumers prefer to buy from small businesses on like-for-like items

Three times as many consumers would choose a small business for goods or services than a large business if price and convenience were equal, research finds.

AXA Business Insurance carried out research among UK consumers to establish the motivators when it comes to a choice between buying goods or services from small or big businesses.

Opening hours are cited as the biggest reason that consumers shop from big rather than small businesses, with price the second biggest reason.

However, consumers on average are happy to pay about 5 per cent more when buying from a small business. For more expensive items this rises marginally to 6 per cent.

Customer service is considered to be a key area of benefit when using a small business with three quarters of consumers considering that small businesses do this better than big businesses.

Providing a ‘real person’ to deal with tops the list of things small businesses do better than their bigger counterparts.

Small businesses are also viewed by consumers as nearly three times as likely to provide quality services or products and nearly four times as likely to treat their staff well.

In terms of being accountable if something goes wrong, small and large businesses are viewed similarly by consumers.

Darrell Sansom, managing director at AXA says, ‘While much of this may come as no surprise to SMEs, we do think that there are some real positives for small business that come out of this research and also some areas where many small businesses could make themselves more competitive.’

Despite the positives, currently more than half of consumers do either ‘none’ or a ‘very small amount’ of their shopping from small businesses.

Over the last year, nearly one in five (18 per cent) have increased the amount they buy from small businesses but a similar number (17 per cent) have decreased the amount. However, over the longer term (five years) the number of those who have decreased the amount they buy from small businesses is greater than those who have increased their shopping with small providers.

Despite the added benefit of convenience, only 15 per cent say the internet has positively influenced how much they buy from small businesses compared with five years ago.

When asked what would motivate them to switch to a small business for something they had traditionally bought elsewhere, special offers are top of the consumers’ list followed by a friends’ recommendation. One in five would be swayed by good marketing.

Sansom adds, ‘We know that the last few years have been a tough environment for pretty much all businesses and it seems that possibly consumers have turned to bigger providers during this time. However, we know that SMEs are much more optimistic about the future than they were a year ago and we hope that this will be reflected in the growth of their businesses.’

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Ben Lobel

Ben Lobel

Ben Lobel was the editor of from 2010 to 2018. He specialises in writing for start-up and scale-up companies in the areas of finance, marketing and HR.

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