In the last quarter of 2024 and the first two months of 2025, UK SMEs faced important challenges, yet they also had great opportunities in retail and digital marketing.

Brick-and-mortar businesses are, in fact, seeing modest growth, while e-commerce and social commerce continue to surge. Meanwhile, social media marketing is evolving rapidly, requiring brands to rethink engagement strategies.

Here’s what SMEs need to know—and how to thrive in this shifting landscape.

📊 UK Retail: High Street’s Slow Comeback & SME Opportunities

The UK high street is showing resilience, however, it is important to remember that survival requires adaptation.

🔹 What’s Working?

✅ In-store sales grew by 3.2% (Jan 2025)—a positive shift after years of decline. Although this growth is a continuation of Christmas sales, it represents an important and encouraging sign that we think should be capitalised upon.

✅ Online sales surged by 15.5% as UK e-commerce penetration hit 31.5% (Statista).

✅ Local and convenience retail is thriving, with:

• +12% YoY growth in convenience stores as community hubs.
• +8% growth in coffee shops, driven by remote work culture.
• +6% growth in value retailers, as cost-conscious consumers seek affordability.

⚠️ What’s Challenging?

In the final months of 2024 and into early 2025, the UK witnessed a concerning trend as an average of 38 stores closed their doors daily, painting a stark picture of the challenges faced by SMEs. Rising operational costs have been a significant factor, with energy prices surging by 17%, placing immense financial strain on businesses already operating on tight margins.

Compounding these difficulties, weather-related disruptions led to a notable decline in footfall, with the British Retail Consortium (BRC) reporting a 12% drop in customer traffic during the fourth quarter of 2024.

These pressures created a perfect storm, forcing many retailers to make tough decisions about their futures.

To make matters worse, the retail landscape became increasingly competitive, with heavy discounting becoming the norm rather than the exception. In December 2024 alone, a staggering 42% of total sales were driven exclusively by promotions, squeezing profit margins even further. This relentless pressure to offer discounts not only undermines profitability but also devalues the hard work and craftsmanship that local businesses bring to their communities.

As retailers grapple with these unprecedented challenges, the need for innovative strategies to attract customers, retain loyalty, and sustain growth has never been more critical. By focusing on creative solutions like localized marketing, personalized customer experiences, and community engagement, businesses can carve out a path to resilience and long-term success.

💡 SME Growth Strategies

At NorthStar Consulting we are always monitoring the trends, and we know how difficult it is to invest in B&M when figures do not seem too heartwarming.

What can SMEs and microbusinesses do in these circumstances? These are just a few tips:

📍 Leverage Localism: Consumers today are increasingly drawn to community-driven retail, making hyperlocal marketing a powerful tool for SMEs.

Start by optimising your Google My Business (GMB) profile—ensure it’s fully updated with accurate business hours, contact details, high-quality images of your products or storefront, and customer reviews.

Encourage satisfied customers to leave positive feedback on your GMB listing, as this boosts visibility in local search results. Create ads that highlight limited-time offers or exclusive promotions available only to residents of your town or neighbourhood. On TikTok specifically, consider creating short, engaging videos showcasing behind-the-scenes moments, product highlights, or even staff introductions to humanise your brand and connect with potential customers emotionally.

Similarly, Instagram’s location tags and stories can help you reach users searching for businesses near them.

Another effective way to engage locally is by joining community groups, both online and offline.

Participate in local events, sponsor neighbourhood initiatives, or collaborate with other nearby businesses to cross-promote each other’s services or make use of each other’s services too (why not?)

While these efforts may require an investment of time or resources, they position your business as an integral part of the community, fostering trust and loyalty among residents who align with your target audience (TA).

Being present in local conversations—whether through social media groups, forums, or physical meetups—ensures you remain visible to the geography and demographic most likely to support your business.

🛍 Blend Physical & Digital: To stay competitive, SMEs should blend physical and digital strategies seamlessly. Implementing options like Buy Online, Pick Up In-Store (BOPIS) or appointment-based shopping enhances convenience for customers while driving foot traffic to your store.

If fuel costs are rising, consider partnering with local delivery services or setting up centralized pick-up points to minimise expenses. Transparency is key here: communicate any associated fees upfront so customers feel informed rather than surprised.

You could also experiment with weekly or monthly offers tailored to your local audience. For example, host “Neighborhood Appreciation Days” where locals receive exclusive discounts or early access to new arrivals. These recurring promotions incentivise repeat visits while creating a sense of urgency and exclusivity around your offerings.

💡 Experiential Retail: Offer in-store events, workshops, or personalised consultations to drive footfall.

💰 Smart Pricing Strategies: Use tiered pricing or member-exclusive discounts instead of aggressive markdowns.

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