A recent report from the Australian Retailers Association and American Express Small Retail Index has revealed the financial challenges faced by small and mid-sized businesses (SMB) in Australia. The report indicates that 43% of SMBs are struggling to meet their financial expectations amid economic challenges, while 57% are exceeding them. As the holiday season approaches, 55% of these retailers express uncertainty or concern about their financial prospects, primarily due to the ongoing slowdown in consumer spending.
The rising cost of doing business is a major concern for SMB retailers, with 93% reporting cost increases in the past year. Notably, 36% have experienced cost increases exceeding 10%, surpassing inflation levels. The most significant concerns cited include reduced consumer spending (57%), wage costs (41%), cost of goods and services (39%), staffing shortages (29%), and cash flow management (29%).
To address these challenges, retailers are focusing on customer acquisition (66%) and building customer loyalty (56%). They are also exploring innovations in artificial intelligence and e-commerce to adapt to changing consumer behaviours.
Paul Zahra, CEO of the Australian Retailers Association, highlights the pressure small retailers are under due to heightened scrutiny of spending and rising costs, such as wages, rent, utilities, insurances, and supply chain expenses. Despite these difficulties, many retailers are displaying resilience by investing in innovation, e-commerce, and sustainability to better prepare for the future.