According to a report by the Australian Retailers Association and American Express Small Retail Index, 43 per cent of small and mid-sized businesses are struggling to meet financial expectations in the face of economic challenges, while 57 per cent are surpassing them. As the holiday season approaches, 55 per cent of small to medium-sized retailers are uncertain or concerned about their financial prospects due to a continued slowdown in consumer spending.
Small and Midsize Business (SMB) retailers are grappling with the rising cost of doing business, with 93 per cent reporting cost increases in the past year, and 36 per cent experiencing increases exceeding 10 per cent, surpassing inflation levels. The most significant concerns include reduced consumer spending (57 per cent), wage costs (41 per cent), cost of goods and services (39 per cent), staffing shortages (29 per cent), and cash flow management (29 per cent).
To address these challenges, retailers are focusing on customer acquisition (66 per cent) and loyalty (56 per cent) while exploring innovations in artificial intelligence and e-commerce. CEO of the Australian Retailers Association, Paul Zahra, emphasises the pressure faced by small retailers due to heightened scrutiny of spending and escalating costs, such as wages, rent, utilities, insurances, and supply chain expenses.
Despite these difficulties, Zahra points out that many retailers are demonstrating resilience by investing in innovation, e-commerce, and sustainability to better prepare for the future.
