Retailers Not Confident As Economy Sags
Only 34 percent of Australian small retailers feel confident about their business performance as they head into the 2023-4 financial year.
They cite a slowing in consumer spending coupled with rising wage costs as their most pressing concerns, with 32 percent experiencing cost increases above 10 percent.
These are among the sobering findings of the inaugural Australian Retail Association and American Express Small Retail Index published today.
Some 385 retailers were surveyed with turnovers bellow $50m, although most had turnovers below $5m.
ARA chief executive Paul Zahra said 2023 had ushered in “a perfect storm” in small retail.
The components were “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,” he said.
“This occurs whilst retailers are grappling to stay competitive on e-commerce
and distribution and invest and innovate in areas such as sustainability. Labour
and skills shortages remain a key challenge.”
Mr Zahra said retailers had focussed on labour shortages at the start of the year. While this had eased, they were grappling now with the “war for talent” which saw them competing with the opportunities offered by large businesses.
Inflation, cost of living increases, and leasing costs were other contributing factors.
Consumer confidence had dropped 2.9 points to 73.9 at June 23, compared to a month earlier.
The survey found that 35 percent of small retailers had reduced margins and found business savings to address cost concerns. Some 19 percent had reduced their staff and business hours as a cost saving measure, while 24 percent passed on higher costs to customers.
“SMBs say the relief measures they would most like to see from government include: tax breaks, utilities reduction, lease cost reduction, wage cost reduction, and reduced inflation,” the report says.
There was some cause for optimism with 17 percent saying their business is performing above or far above expectation compared to last year. Some 34 percent were feeling “somewhat confident” or “confident” about the year ahead.
However, many were simply meeting expectations (42 percent) and 41 percent were performing below or far below their previous final year forecasts.