New research has revealed that just over half (51 per cent) of Australian small retail businesses are performing below or significantly below their financial expectations.
In comparison, the latest Australian Retailers Association (ARA) & American Express Small Retail Index found that nearly half (49 per cent) are meeting or exceeding their financial expectations.
The research found the top four concerns for small businesses for the next 6-12 months are a slowdown in consumer spending (59 per cent), wage costs (46 per cent), costs of goods and services (42 per cent) and cashflow management (32 per cent).
Small retailers are also looking for creative ways to grow their businesses with about two-thirds (67 per cent) looking for innovative ways to acquire new business, more than half (57 per cent) focused on encouraging customer loyalty, and nearly a third (30 per cent) wanting to improve online engagement with their customers as a priority.
ARA CEO Paul Zahra said the research confirms many small businesses are doing it tough yet are seeking opportunities for growth.
“Small businesses are a crucial part of the retail community and a bellwether for the health of our sector,” Zahra said. “This research demonstrates resilience amongst the small business cohort despite tough times. Unfortunately, many are struggling to cope with rising inflation, steep interest rates and the cost-of-doing-business crunch.
“Whilst unsurprising, it is concerning to see that fears around wage costs are on the rise.”
Most (89 per cent) survey respondents said they have incurred higher costs in the past 12 months. Small retailers reported using a combination of measures to deal with those increased costs, such as passing costs onto consumers (51 per cent), reducing margins (47 per cent), finding savings in other areas (37 per cent), and reducing staff (37 per cent) being highest among the solutions.
Zahra said the ARA will continue to advocate for relief measures from the Federal Government for small businesses.
“We need urgent action to ensure Australia’s $420 billion retail economy not only survives but thrives,” Zahra said.
American Express VP of global merchant services Australia, Robert Tedesco, said supporting small business owners is critical for maintaining vibrant communities.
“Small businesses are the backbone of the local economy,” Tedesco said.