The ARA & American Express Small Retail Index has revealed the concerns and challenges felt by SMBs across Australia
The inaugural ARA & American Express Small Retail Index highlights the unprecedented pressure small and medium businesses (SMBs) are under as the country feels the effects of inflation.
“Following years of consumer uncertainty, supply chain constraints and economic pressures, this research commissioned by the Australian Retailers Association and American Express paints a picture of an industry that is bracing for more challenges ahead,” said Emily Roberts, Vice President and General Manager of Consumer and Commercial Services at American Express.
“Despite this, history has shown that no industry is more resilient and better positioned to emerge from adversity. Retailers that adapt how they build, market and sell their products to meet new consumer behaviours will be best placed to acquire new customers, secure their loyalty and navigate the challenges to come.”
Conducted online between May and June, the ARA & American Express Small Retail Index surveyed 400 Australian SMBs with retail turnovers below $50m.
34 percent of small businesses are concerned for the year ahead with 41 percent of SMB retailers performing below (33 percent) or far below (8 percent) their FY23 financial forecasts. Major concerns for these retailers are rising cost of doing business with wage pressures, the cost of goods and services and cash flow management.
A further 34 percent are feeling confident, resilient in the face of ongoing pressures with 17 percent performing above or far above their expectations for FY23.
Uncertainty is an equally key theme across the remaining surveyed retailers. 32 percent of SMBs are feeling uncertain about the year ahead which the survey identifies will impact growth, employment and investment decisions.
Top priorities for the year ahead are of course acquisition and retention, with acquiring new customers and encouraging customer loyalty topping the list.
More than 91 percent of SMBs have seen cost increases in their businesses across the past 12 months, with 24 percent coping by absorbing cost increases by passing higher costs onto customers. 19 percent are reducing margin, 12 percent have resorted to reduced staff and 7 percent are reducing stores or store hours.
“I cannot recall a period of more significant challenge for our retail community – with our small retailers disproportionately affected by ongoing revenue and resource pressures,” ARA CEO Paul Zahra said.
“2023 ushered in the perfect storm for retail – a spending slowdown, coupled with the rising cost of doing business, all taking place alongside the largest set of government reforms in decades and a retail crime wave that is impacting the wellbeing of workers and the bottom line of companies.
“We are concerned about the outlook for small retailers in these tumultuous economic conditions and the toll these pressures are taking.
“Small businesses are the cornerstone of our economy and it’s vital that they receive adequate support.”
SMBs say among the measures they would like to see from government are: tax breaks, reduced inflation and relief for utilities, leasing and wage costs.
The ecommerce landscape is changing. With a Power Retail Switched On membership, you get access to current e-commerce revenue and forecasting, traffic levels, average conversion rate, payment preferences and more!