Against a backdrop of rising interest rates, UK small and medium-sized businesses (SMEs) are embracing innovation to mitigate rising costs and maintain their competitive edge, according to the latest Barclays Business Barometer.
To accomplish this, SMEs are turning to technology investments to increase productivity (45 per cent), as well as future-proof their company (44 per cent). Notably, businesses investing in innovation are committing, on average, nearly half (48 per cent) of their annual revenue to technology.
British retailers, in particular, are confident about growth over the next year, with 8 in 10 (85 per cent) reporting a positive outlook when compared to the last 12 months4. In fact, Barclays found that two-thirds (66 per cent) of retail SMEs are open to embracing new technology while, over two-fifths (41 per cent) have established dedicated technology teams within their business, each employing 13 people on average.
Retailers are turning to technology to keep up with the demands of high-street shoppers, with recent Barclays research finding that 7 out of 10 consumers use the Internet to inform how they shop and make savings. For example, online grocery websites have seen an increase of 54% in online traffic, with traffic to non-grocery up by 42%. In fact, almost all (93 per cent) of retailers say that harnessing data is key to their future success. The past year has seen retailers already actively investing in cutting-edge technologies to enhance operations such as data analytics (18 per cent) and artificial intelligence and machine learning (12 per cent).
Colin O’Flaherty, Head of SME at Barclaycard Payments, said: “It’s promising to see that SMEs are feeling more optimistic about revenue growth and are eager to invest in cutting-edge technology to future-proof their companies. Retail SMEs in particular have displayed a remarkable agility in adapting to evolving consumer behaviours by adopting emerging technologies – setting the stage for a brighter year ahead.
“Small businesses are vital to the UK economy and play a key role in supporting employment, so the employee growth projections are also really encouraging for both business stability and economic prosperity.”
Commenting on statistics relating to the increase of technological investment amongst SMEs in the latest Barclays Business Barometer, Mike Randall (pictured), CEO of Simply Asset Finance said: “Innovation and productivity sits high on the agenda for SMEs in Barclays' latest Barometer. With businesses across the board still facing skill shortages and ongoing cost pressures, investing in technology is clearly seen as a way to alleviate these challenges and yet again demonstrates the commitment of small businesses to remain resilient.
"With so many SMEs investing nearly half their annual revenue on technology, it's important that they do this in a structured way that helps optimise their cashflow. Each business' intentions for investing in technology is different, which is why working with a bespoke lender that can structure finance in a tailored way can help to spread the upfront cost of this investment. At Simply for example, we've observed a growing focus on technology among our customers within construction, logistics and manufacturing as they look to manage productivity gaps."
Small businesses could hire 3.5 million this quarter
Data from the latest Barclays Business Barometer also highlights that UK SMEs could help bolster employment by hiring as many as 3.5 million people this quarter, with businesses that anticipate employee growth planning to hire eight new recruits on average before the end of September, indicating a growing confidence in the economy.
This comes as nearly three-in-five (57 per cent) reported revenue growth last quarter, marking the highest level in 18 months. In fact, nearly two-thirds (62 per cent) of SMEs see this trend continuing, predicting revenue increases in a year’s time.
These figures are supported by data from Barclays, which sees nearly half of the nation’s credit and debit card transactions, showing a rise of 1.08 per cent in the volumes of transactions to SMEs in Q2 compared with the same period last year.