Is shopper hypocrisy costing small firms business?

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Date: 10 December 2019

High street shopping

New research has found that many UK shoppers don't put their money where their mouth is when it comes to supporting small firms and independent shops.

Despite demonstrating clear support for small businesses, the research proves that when it comes to the crunch consumers will buy from a big chain if a product is cheaper.

The study, conducted by Iwoca, saw 600 people being given a collection of news stories to read in which local businesses were reported to be struggling or succeeding. However, half the time they were national chains, while the other half were small firms. In all other respects the stories were identical.

The results showed that there was clear consumer preference for small businesses over multi-nationals. People showed 21% more sympathy towards struggling small businesses and felt 19% more positivity when reading about their successes.

However, when Iwoca "stress tested" people's support of small businesses, with a like-for-like purchasing decision, most were willing to turn their backs on them if they could save as little as £1 by buying from a large company instead.

The results suggest that small businesses could risk losing almost half (48%) of their customers if their prices are just 10% higher than larger competitors.

The fictitious stories shown to shoppers included negative scenarios where businesses were closing down as well as good news stories. Those taking the test were not aware that they had been randomly shown the small or big business version of the stories.

Test subjects were asked to imagine that the stories related to their local community and to rate how each one made them feel. Across seven news stories, they reported their levels of sympathy, positivity, disappointment and respect.

People showed significantly more emotional support for small businesses in six of the seven news scenarios tested. They felt more positive when small businesses did well and were more sympathetic and disappointed when they struggled.

When given the choice of buying the same product from a small local business or a large national retailer, with both stores equally easy to buy from, 72% chose the small business. However, when the product was just £1 more expensive at the small business, the majority (68%) chose the large retailer instead. And when the price was £5 higher at the small business, only one in six people chose the independent retailer.

Written by Rachel Miller.

Small business news block