SME numbers skyrocketing in Brexit Britain, says GS1 UK report

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SMEs are flourishing in the UK, according to a study published by GS1 UK, the standards body that licenses barcodes in Britain. 

The not-for-profit organisation has seen a significant year-on-year rise in the number of SMEs joining its membership, a reliable bellwether for the increase in successful new start-ups.     

Since the previous Buying British report was released in 2017, the percentage of GS1 UK members with a turnover of less than £500,000 has risen from 58 per cent to 64 per cent. 

SMEs now represent the majority of GS1 UK’s 39,000-strong community, and almost a third of its members turn over less than £80,000 annually.

This increase has been driven by the shift in the size of new joiners trading with GS1’s Global Trade Item Numbers (GTINs) – 13-digit number that sits below every barcode. In 2017, 78 per cent of new joiners fitted into the SME category – in 2018, this percentage increased to 84 per cent. 

GS1 UK’s members span across more than 25 industries, and new members mainly sat within the organisation’s historically largest sectors – health, beauty and cosmetics, apparel and food and grocery accounting for 41 per cent of all new joiners.  

Smaller sectors with more room for disruption showed prodigious year-on-year increases, such as children and baby products, which posted 32 per cent growth from 2017–18.

Brand Britain burgeoning

Despite fractured politics and economic doubts, there has been no better time to trade internationally than the present, with exports reaching £639bn in the year to February 2019, an increase of 3.1 per cent on 2018. 
 
Start-ups are being supported like never before by a range of accelerator programmes and schemes that seek to promote and bolster new brands. Currently, there are almost 200 such investment sources in the UK, and several are fostered by the country’s biggest retailers. 

Morrisons’ Local Foodmakers campaign, for example, has taken on products from 153 SMEs since 2017. 

Routes to market 

In the all-important quest for shelf space, the report found that SMEs target preferred retailers for access to the grocery market, and the choices they make do not necessarily correspond to the supermarket’s size and reach. 

Unsurprisingly, Tesco, with the largest share of the grocery market, was cited by 23 per cent of new British companies joining GS1 UK as their preferred retailer.  

However, SMEs also saw opportunities trading at Waitrose, which commands one fifth of Tesco’s market share, and Ocado, which accounts for only 1.3 per cent of total UK grocery sales.

Responding to the report’s publication, Gary Lynch, chief executive officer of GS1 UK, said: “Today’s shoppers have the world at their fingertips when it comes to product choice, and they are increasingly choosing to buy British for the quality, innovation and traceability implications it has. They are also keen to support smaller shops offering local produce wherever possible. 

“Our membership data indicates a fertile retail environment for new and young companies. SMEs continue to enter the market and recent new joiners have helped drive growth in some of the smaller, more niche industries. 

“Companies in these sectors offer unique, bespoke products, not available on the high street and shoppers appreciate the breadth of choice that smaller shops and suppliers add to the larger retailer mix. 

“At a time when our global reputation has taken a hit due to the political palaver, in the commercial world, “British” is still a byword for excellence.”