The State of SMB Retailers in Australia

According to a new report from American Express in the lead up to ‘Shop Small’ month, one-third of Australian small businesses fear becoming insolvent in the next three to five years, with 43 percent of fashion retailers and 53 percent of food retailers expressing the highest levels of concern.

Lisa Belcher, the vice president of small merchants for American Express, says small retailers across all channels are feeling the pressure.

“Both online and traditional bricks-and-mortar businesses have increasing pressures; both are highly concerned about the increasing costs of overheads,” she says. “Of course, there are different pressures for both too.

“Online retailers (41 percent) are more concerned with increasing competition from big businesses, while those that don’t operate online are most concerned about the economic climate in Australia and retaining existing customers.”

On a more positive note, the research has revealed that a high proportion of retailers do expect to experience strong growth in the next 12-months. Seventy-seven percent of small e-commerce businesses are confident they’ll see a boost in revenue, while 61 percent of physical shop fronts say they think an increase in sales is on the horizon.

This could be the result of consumer sentiment.

“Most consumers claim to have good intentions and even prefer to shop with small retailers over large, yet the frequency of spending has fallen 12 percent over the last two years,” Belcher says.

As part of the study, however, consumers were asked if they wanted to do more to help small retailers and 86 percent said they could do more to support local companies.

The Co-Founder of multichannel furniture and homewares store Koskela, Sasha Titchosky says she feels encouraged by this shift in consumer sentiment.

“It’s really encouraging to see the swing-back to local businesses. At the end of the day, people value connections and community… This is where local businesses really have an advantage,” Titchosky says.

Homewares and furniture retail store, Koskela.

“It would be really sad if all we’re left with are big-box retailers that sell all the same products. We all have the ability to influence the future, and the most impactful way we can do this is in our purchasing power as consumers.”

According to Titchosky, thanks to support from consumers both her online and offline sales channels are growing.

“I’m certain this is because of all the work we have done to source and design interesting products and to reflect what we value and also to build a really customer focused business that prides itself on creating a great retail experience. We have also put more energy into the online side of our business, which is seeing great growth.”

She does note, however, that if she didn’t have a cross-channel presence her business’s success story could be very different to what it is today.

“I don’t think you can be one or the other any longer. I consider the bricks-and-mortar part of our business as one of our marketing expenses not just a direct revenue generating site,” she says.

As more online-only retailers are looking to traditional shopfronts as a way to improve customer experience and generate brand awareness, Titchosky says that service needs to be front and centre.

“People like to see and feel things – to really experience a brand. I believe that bricks-and-mortar must offer extraordinary service and create a real experience for customers that reflects the brand and its online offerings.”

Improving Government Support of Small Retailers

According to Belcher, there are government incentive schemes out there, but a lack of awareness is putting small retailers at a disadvantage.

“Only eight percent of small businesses [across all sectors] actually accessed available government grants or resources in the last 12-months,” she says.

“Small businesses are missing out on the help available to them, which points to a lack of awareness about the government assistance on offer. I think that access to any support should be kept as simple as possible, as we know how time poor small business operators are.”

Titchosky echoes this statement, saying accessing government support is often too difficult to make it a worthwhile endeavour.

“There are definitely ways local governments could help make it simpler to set up businesses or change ways they operate – there’s so much red tape sometimes.”

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