With the UK seeing a record 900,000 new start-ups in 2023, British consumers are showing more interest in supporting small businesses over big chains, especially around Christmas. But what is the appeal of shopping small, how many Brits prefer it and why, and how much more are they willing to spend for something with a more personal touch?

To find out, Capital on Tap conducted a survey looking into the British public’s spending habits around shopping with small businesses, and if this changes in the festive months as we look for gifts for loved ones. Kamilla Fernandes-Pickett, Senior Marketing and Communications Manager at Capital on Tap also shares top tips for small businesses to thrive this festive season.

You can read the full research here: https://www.capitalontap.com/en/blog/posts/why-we-shop-small/

21% prefer to buy from smaller businesses compared to a larger chain

According to the survey, 21% of the population would rather buy from smaller companies, largely driven by a desire for unique, personalised products—52% cite this as their top reason. Meanwhile, 18% favour larger retailers, and 61% of Brits say they have no preference.

Customers also seem conscious of the broader impact of their buying habits, with 51% wanting to shop small to support their local community and economy. Other reasons they shop small include better customer service and quality of products (38%) and understanding the impact of their spending on the business owner (42%).

People in Brighton are the most likely to shop at small businesses, with 38% of residents preferring to shop small

When it comes to supporting local businesses, Brighton stands out, with 38% of residents preferring to shop small. An impressive 68% of shoppers in Brighton and Hove choose small businesses specifically to support the local economy. The city also has one of the highest concentrations of small businesses in the UK, with 16,810 active enterprises—almost triple the national average.

However, not all areas share this enthusiasm. In Portsmouth, just 7% of consumers prefer to shop small, although local businesses still have opportunities to reach a broader audience online.

Brits are willing to pay up to £24.65 extra for art from a small business

Brits are willing to invest more in particular items when shopping small. At the top of the list is art, with customers ready to pay an average of £24.65 extra for unique pieces. Jewellery follows closely, with customers willing to spend an additional £20.58 for pieces from smaller sellers, especially when personalised options are available.

Interestingly, Brits are willing to pay extra for a variety of items when shopping small, even for everyday purchases. Coffee lovers, for example, are happy to spend an additional £6.54 on a hot drink from a local business, valuing the craft and personal touch that often comes with it. When it comes to meat, customers are willing to pay £9.54 more, likely appreciating the quality and sourcing from smaller suppliers.

Even greeting cards see an added premium, with people ready to spend an extra £6.07, favouring unique designs and thoughtful, handcrafted options.

81% of the UK considers Christmas shopping with small businesses

With 81% of UK consumers considering shopping with small businesses for Christmas, what can entrepreneurs do to capture this interest? The survey found that personalisation is key—52% of customers are drawn to the personal and thoughtful nature of gifts from independent sellers.

When it comes to receiving gifts at Christmas, 57% say they don’t mind whether it comes from a smaller or larger business. But between the two, small businesses win out with 16% preferring to receive a gift from a small business compared to 10% preferring a present from a larger chain.

Kamilla Fernandes-Pickett at Capital on Tap shares tips for small business success this festive season: “To build trust with customers and create a sense of community, small businesses should focus on three key strategies: establish an engaging online presence to keep followers informed, participate in local events to connect face-to-face, and offer personalised products or services to give customers a unique, individual experience.”