Glovo research: retail technology investment key as SMEs enter 2023 in survival mode

The cost-of-living crisis, rising inflation and fears of a recession are creating considerable challenges for retailers and restaurants in the UK, according to new research commissioned by Glovo.

This found that changing consumer habits post-pandemic, further impacted by the current economic downturn, are causing 56% of businesses to see themselves unprepared for the future.

In the UK, 80% of businesses worry about their future profitability, with 32% facing the challenge of reduced consumer spending.

The study of more than 3,200 small and medium-sized food, grocery and restaurant businesses across nine markets in Europe and Africa (the UK, Spain, Portugal, Italy, Poland, Bulgaria, Kenya, Romania and Morocco) found that 34% of SMEs regard reaching new customers as their main challenge, with 25% in the saying the same.

Among the factors causing SMEs to seek additional support and solutions were changing consumer habits, high inflation, lower consumer spending and overarching macroeconomic risks.

Rodrigo Alier, Executive Director, Partners & Brands at Glovo, says: “This research confirms that, unsurprisingly, just as SMEs are moving past the hangover of the pandemic, they find themselves struggling once again.”

“The cost-of-living crisis weighs heavily on their minds and their balance sheets, with  more than two-thirds of businesses surveyed in the UK and nearly half of those in Spain saying they are in ‘survival mode’. Across all nine countries, an average of 46% of businesses say the same.”

“More than half of all businesses surveyed say they are unprepared for the future and with 80% of UK businesses fearing the same, more must be done to give them the resources to optimise customer service and experience, and ultimately support their growth so they can thrive.”

According to the study, customer behaviour has changed considerably over the last two to three years, with two out of three Italian businesses stating that it was the necessity to maintain business processes during the pandemic that prompted them to digitalise.

78% in the UK say customers are now more concerned about their digital experience than their in-person dining experience. While 57% in Romania say consumers are now more focused on digital than their in-store experiences.

In response, a third of UK businesses see digitisation as integral to growth, and nine out of ten have implemented new technologies to help them become more agile.

Yet this may prove a steep challenge, with 63% of respondents in Portugal saying they have never been digitised and 61% of companies in Spain saying they were not digitised pre-pandemic.

Looking ahead to solutions, 50% of UK businesses want to invest in marketing, followed by improved customer experience (45%) and tech and innovation (41%).

Better ways of understanding consumers are also needed. In Portugal, 72% of SMEs say face to face consumer feedback is their main source of information. 

Sustainability is also an increased focus for UK firms, with 40% investing in sustainable packaging options, and 85% of consumers wanting to have more sustainable options in the stores and restaurants they use - a trend consistent globally.

The role of a technology partner is set to grow, with 82% of UK firms stating one would help their business to innovate and scale at speed, and 46% of respondents globally saying the same.

While two in five UK businesses say that a technology partner combined with optimised delivery methods, such as ultra-fast delivery, can help them prepare for the future.

Considering 40% of UK respondents are currently struggling to ease their delivery operations, this is of particular significance, Glovo claims. While in Italy, 80% believe a delivery player is both fundamental and necessary for their business.