Retail SMEs confident about future prospects, finds HiFX survey

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Confidence levels among small retail businesses remains strong, despite two years of global economic uncertainty, according to a survey by foreign currency specialist HiFX.

It found many businesses are feeling optimistic about the prospects for the year ahead. 

However, despite this optimism many retail business leaders have moments of doubt with 24% admit to having work related worries once a day or more.  

The study found six in 10 (59%) retail firms polled expect an increase in profits in the financial year ahead. Having weathered the recession, many businesses have made cost cutting a priority in an attempt to increase profits, with 19% of retail businesses planning to drive through cost control measures or make their business more efficient over the next 12 months.

High up on the list of concerns for retail SMEs over the next six months are the reduced demand for goods and services (50%), currency fluctuations (39%) and the tax burden (33%). 

The strength of the pound against other currencies in the coming year is another cause of anxiety, but less so than six months ago. Over one in four (28%) of businesses surveyed said they were worried about sterling weakening, compared with over five in 10 (56%) six months ago.

The economic downturn has also seen a knock to the confidence of some retail businesses with just under a quarter (24%) of the financial decision makers polled admitting they have work related worries once a day or more, the survey found.

When it comes to talking about their worries or concerns most preferred to turn to their partner or spouse (24%) before their colleagues (20%), suggesting they find it easier to turn to those closest to them outside of their working life.

Mark Bodega, Director at HiFX, said: “A range of global factors influenced the FX markets in 2011, which resulted in the three main currencies the UK retail businesses are exposed to – the US dollar, sterling and euro – all taking it in turns to be the whipping boy of the currency markets. This instability has had a mixed effect on retail SMEs. As the Government continues to talk of an exporter led recovery, the news exports hit a record high in the first quarter of this year will have provided a welcome confidence boost as it suggests that international trade made a strong contribution to first quarter GDP. 

However, whilst exporters have benefited from a weak pound, importers have been suffering in equal measure. Despite this, the survey reflects, the mood among the business community for the year ahead appears to be positive and determined. For those that do have work related concerns it is interesting to see most turning to family and friends rather than colleagues for advice.”