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Shop small month: Call to action as businesses risk shutting shop

Small businesses across Australia are calling for consumer support this Shop Small Month after a remarkably tough year as research released today reveals a third of businesses fear insolvency.

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Australia’s small businesses are still struggling with poor consumer confidence in the wake of flatlining retail sales, according to research released today by American Express in advance of Shop Small Month on November 1.

The research commissioned by American Express revealed there is still work to be done to help support small business – with one third of Australian small business owners fearing becoming insolvent in the next three to five years and with those within retail found to be the most concerned.

The new research has shown a need for more support from the nation to save the future of small businesses in retail with consumer spending at small business declining.

The research from 2017 also found that there was work to be done with just 29% of consumers in 2017 claiming to have increased their small business shopping frequency compared to 37% in 2016.

As small business confront remarkably tough market conditions, Retailbiz spoke to the businesses at the frontline to get to the bottom of some of their biggest challenges.

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Case study: Hunting For George

Victorian homewares retailer Hunting for George told Retailbiz that the current market climate has been particularly tough this year – and small businesses are feeling the pinch now more than ever.

Co-founder and brand director of Hunting for George, Lucy Glade-Wright says that the volatile market has placed significant pressure on small business.

“We’ve seen a shift in the traditional retail cycle this year. It’s a bit more unpredictable than normal and with longer periods of low sales more and more retailers are resorting to discounting. This then creates a confused market and encourages bad habits for consumers who then begin to expect discounting to become the norm, not the exception.”

But the rise of e-commerce continues to present both opportunities and challenges for small businesses in Australia, she says.

Hunting for George in Melbourne

“As an online retailer we move so quick, whereas traditional suppliers and retailers move at a different pace. This is definitely an opportunity as e-commerce enables you to be far more agile h­owever it also creates challenges when collaborating with traditional players as you are trying to combine two very different ways of thinking.”

Among some of the other biggest challenges for their business are constricted cash flow, maintaining strong stock levels and finding staff to enhance the brand.

“A challenge we’ve been facing has been sustaining growth and being able to keep up with the scale of which our business needs to grow.”

And bad behaviour from larger retailers ripping off merchandise from small retailers also needs to be cracked down upon, Ms Glade-Wright says.

“There is some bad behaviour from some of the largest Australian companies who choose to take a massive amount of ‘inspiration’ from smaller, independent brands and sell their version for a fraction of the price. This is something that we have witnessed countless times over the last 8 years and there is little that small business can do to fight back. Greater awareness and knowledge of this would help to support small.”

But ultimately, consumer support is absolutely critical to help  small businesses stay afloat, Ms Glade-Wright says.

“In a small business every single order makes a difference. Every order gets noticed and every order is valued. If you choose to support small business the effect will be so much greater than if you choose to spend your money with a multinational retailer. If you shop small and enjoy the experience, then tell your friends. Word of mouth is everything and even if you only tell one person, that is one more person that knows about Hunting for George!”

Case study: Koskela

Koskela in Rosebery, NSW

Sasha Titchkosky, co-founder of Koskela , a NSW  furniture and homewares retailer, told Retailbiz that the greatest challenge for small business in the current climate is finding good staff.

“The tide seems to be turning here as people start looking for roles where they can have a greater impact and that align more with their values. Now the challenges probably lie in improving the efficiencies in the business. It’s hard to know how best to do this at times so that the cost base is not continually climbing.”

Changes in the Australian Government are also significantly impacting small businesses, Ms Titchkosky says.

“The combination of what’s happening globally, the lack of stability in our Government and falling house prices mean consumers are less likely to spend as freely. We are still seeing spending but we’ve noticed people are more considered and are often looking for pieces with more meaning. ”

Despite some of these key challenges, e-commerce is presenting big opportunities for small business and opening up new avenues of opportunity for retailers to branch out, she says.

“E-commerce is definitely an opportunity for us. We’ve seen our revenues increase in this area as we’ve focused more on it building on the brand and brand experience we’ve created through our physical store.”

While Ms Titchkosky says she’d like to see less red tape and the abolition of payroll tax for business, ultimately, consumer support is critical to help small businesses survive tough market conditions.

“Consumers have the power to create change through purchasing – so get out there and support small businesses that are independently owned and trying to offer something different to customers! This way you help create jobs, support diversity in retail and help build great communities of connected people.”

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