51% of Small Australian Retailers Face Challenges – Slowdown in Consumer Spending is the Main Concern

New research reveals that more than half (51%) of small Australian retailers are falling short of their financial expectations. On the flip side, 49% of these businesses are either meeting or surpassing their forecasts, showcasing a mixed outlook for the sector.

The research, conducted by the Queensland University of Technology on behalf of the ARA and American Express, underscores the challenging environment for small retailers in Australia. The definition of a “small business” varies depending on the context, with Fair Work Australia defining it as one with fewer than 15 employees, while the Corporations Act 2001 describes it as employing fewer than 20 people, or up to 100 in the case of manufacturers.

The Australian Retailers Association (ARA) and American Express Small Retail Index highlight the top concerns for small businesses in the coming six to twelve months. These include a slowdown in consumer spending (59%), rising wage costs (46%), increasing costs of goods and services (42%), and challenges in cash flow management (32%).

Despite these obstacles, many small retailers are exploring creative strategies to stimulate growth. According to the research, two-thirds of these businesses are seeking innovative ways to attract new customers, 57% are focusing on boosting customer loyalty, and nearly 30% are prioritizing enhanced online engagement with their clientele.

The survey, which included 382 small business owners from the retail and hospitality sectors, found that a vast majority (89%) have faced higher costs over the past year. In response, 51% have passed these costs onto consumers, 47% have reduced their margins, 37% have sought savings in other areas, and another 37% have cut staff.

Paul Zahra, CEO of the ARA, emphasized the critical role small businesses play in the retail sector, noting that they are often a barometer of the industry’s overall health. Zahra pointed out that while many small businesses are demonstrating resilience, they are also grappling with rising inflation, high interest rates, and the increasing cost of doing business.

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