More than half (51%) of small Australian retailers are performing “below or significantly below their financial expectations” according to new research.

The glass-half-full view is that 49% of small retail businesses are meeting or exceeding their forecasts.

The latest Australian Retailers Association (ARA) & American Express Small Retail Index found the top four concerns for small businesses over the next six-to-12 months are a slowdown in consumer spending (59%), wage costs (46%), costs of goods and services (42%) and cashflow management (32%).

It also showed that small retailers are “looking for creative ways to grow their businesses”. Two-thirds are “looking for innovative ways to acquire new business”; 57% are “focussed on encouraging customer loyalty”, and nearly a third (30%) want to “improve online engagement with their customers as a priority”.

 “Small businesses are a crucial part of the retail community, and a bellwether for the health of our sector,” said ARA CEO Paul Zahra.

“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.”

A large majority (89%) of survey respondents said they have incurred higher costs in the past 12 months. In response they are passing costs onto consumers (51%), reducing margins (47%), finding savings in other areas (37%), and reducing staff (37%).

The research involved 382 small business owners from the retail and hospitality sectors surveyed in the ARA & American Express Small Retail Index, conducted in June 2024 by the Queensland University of Technology, on behalf of the ARA and American Express.

The Australian Securities & Investment Commission (ASIC) says “there is no one definition for ‘small business’. This is because different laws define ‘small business’ differently”.

Fair Work Australia describes a small retail business as one with fewer than 15 employees. The Corporations Act 2001 states a “small business” employs fewer than 20 people (although this rises to 100 if the business is manufacturer).