SME Growth Prospects in H2 2025: A Sustainable Development Perspective
Small and medium-sized enterprises (SMEs) encounter unique challenges compared to larger corporations, yet they possess distinct advantages that can be leveraged for growth. This report synthesizes insights from a recent webinar led by Alex Lawrence, Senior Strategic Insights Director at Circana, focusing on SME growth drivers in the UK market with broader applicability. Emphasis is placed on aligning growth strategies with the United Nations Sustainable Development Goals (SDGs) to foster inclusive and sustainable economic development.
Key Strategies for SME Growth Aligned with SDGs
1. Securing Placement in Major Grocery Stores
Access to major grocery retailers is critical for SMEs to increase market penetration and consumer reach, supporting SDG 8 (Decent Work and Economic Growth) and SDG 12 (Responsible Consumption and Production).
- In the UK, impulse purchases represent the only growing segment within SME food and beverage sales in major grocers, while ambient, frozen, and chilled categories show stagnation or decline.
- North American data from USDA ERS indicates that nearly two-thirds of consumer calories are purchased through large grocery stores, highlighting the importance of these channels for SMEs.
- SMEs should prioritize entry into supermarkets, supercenters, and large grocers, which supply 65% of food and beverage consumption in US households.
2. Minimizing Product De-Listing
Reducing the rate of product de-listing is essential for sustaining growth and maintaining market presence, contributing to SDG 9 (Industry, Innovation, and Infrastructure) and SDG 8.
- Lower sales volumes increase the risk of de-listing; SMEs face disproportionate de-listing compared to larger corporations.
- In the UK, SMEs hold 48% distribution share but experience higher SKU de-listing rates, representing significant growth barriers.
- Retention of SKUs can create a platform for sustained growth in the latter half of 2025.
3. Expanding Distribution Points
Increasing the number of distribution outlets is vital for SME expansion and resilience, supporting SDG 8 and SDG 12.
- SMEs losing distribution points experienced a 21.4% reduction in distribution share year-over-year, compared to an 11.6% reduction for large companies.
- Brands gaining distribution saw an 18.5% increase in sales value, whereas those losing distribution suffered a 7.1% decline.
- Addressing distribution capability gaps is necessary to transform risks into growth opportunities.
4. Leveraging Data and Analytics
Utilizing data-driven insights enhances decision-making and competitive positioning, aligning with SDG 9 and SDG 8.
- Large companies benefit from access to point-of-sale (POS) and retailer data, enabling analysis of market dynamics such as price elasticity and cannibalization.
- Affordable entry-level analytics tools are now available for SMEs, offering similar capabilities to larger competitors.
- Data utilization assists in mitigating de-listing risks and optimizing distribution strategies.
Economic Context and Consumer Confidence
SMEs face global economic headwinds including subdued consumer demand and evolving trade tariffs, impacting sustainable economic growth (SDG 8) and responsible production (SDG 12).
- Price competition alone is insufficient; SMEs must focus on volume growth and market share retention.
- Promotional activities and off-shelf displays will be critical to attract cost-conscious consumers amid ongoing cost-of-living pressures.
- Consumer confidence varies regionally:
- In the US, confidence rose in May after five months of decline.
- The EU experienced a decrease in consumer confidence in June.
- The UK saw modest improvements, though geopolitical tensions may dampen sentiment.
Conclusion
For SMEs aiming to achieve sustainable growth in the second half of 2025, strategic focus should be placed on:
- Enhancing access to major retail channels (SDG 8, SDG 12).
- Minimizing product de-listing to maintain market presence (SDG 9, SDG 8).
- Expanding distribution networks to increase consumer reach (SDG 8, SDG 12).
- Adopting data analytics to inform strategic decisions (SDG 9, SDG 8).
These approaches collectively contribute to the achievement of the Sustainable Development Goals by promoting inclusive economic growth, fostering innovation, and encouraging responsible consumption and production.
Source
FoodAPS National Household Food Acquisition and Purchase Survey, Updated: 3/27/2025. Accessed 6/24/2025. www.ers.usda.gov/data-products/foodaps-national-household-food-acquisition-and-purchase-survey
1. Sustainable Development Goals (SDGs) Addressed or Connected
- SDG 8: Decent Work and Economic Growth
- The article focuses on growth strategies for SMEs, emphasizing economic growth and business sustainability.
- SDG 9: Industry, Innovation, and Infrastructure
- Discussion on the use of data analytics and technology by SMEs to improve performance and competitiveness.
- SDG 12: Responsible Consumption and Production
- The article touches on retail distribution, product listings, and consumer purchasing patterns which relate to sustainable consumption.
2. Specific Targets Under Those SDGs
- SDG 8 Targets
- Target 8.3: Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro-, small- and medium-sized enterprises.
- Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading and innovation.
- SDG 9 Targets
- Target 9.5: Enhance scientific research, upgrade the technological capabilities of industrial sectors, including SMEs.
- SDG 12 Targets
- Target 12.2: Achieve the sustainable management and efficient use of natural resources.
- Target 12.6: Encourage companies, especially large and transnational companies, to adopt sustainable practices and to integrate sustainability information into their reporting cycle.
3. Indicators Mentioned or Implied to Measure Progress
- For SDG 8
- Sales value growth of SMEs (e.g., increase or decrease in sales percentages).
- Distribution share and SKU count retention rates to measure SME market presence and sustainability.
- Consumer confidence indices (e.g., The Conference Board Consumer Confidence Index, GfK Consumer Confidence Index) as economic indicators impacting SME growth.
- For SDG 9
- Adoption rate of data analytics tools and POS data usage among SMEs.
- Number of SMEs integrating technology to improve distribution and sales strategies.
- For SDG 12
- Percentage of products retained on retailer shelves (de-listing rates) as a proxy for sustainable production and consumption patterns.
- Market share of impulse purchases vs. other categories indicating consumer behavior trends.
4. Table: SDGs, Targets and Indicators
SDGs | Targets | Indicators |
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SDG 8: Decent Work and Economic Growth |
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SDG 9: Industry, Innovation and Infrastructure |
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SDG 12: Responsible Consumption and Production |
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Source: dairyreporter.com