Study shows that the retail industry is the least confident business sector in 2011 because retailers are faced with challenges such as rising costs, revenue growth and cash flow management.

The Sage SME business sentiment index 2011, an analysis of Australian business attitudes, priorities and issue, found that four in ten Australian retailers believe their business is performing better compared to last year and three in ten stating that their business is performing worse. This compares to 38 per cent of all businesses stating their business is performing better and just 17 per cent saying it is worse.

Despite this, the study found retailers are also more negative when it comes to confidence about the year ahead compared to 2010. Almost 37 per cent of retailers are less confident about the year ahead than last year compared to 28 per cent of all businesses, while 33 per cent are more confident, the same as all businesses.

Alan Osrin, Sage Software Australia managing director, said retailers were among the first of the industry sectors to be affected in times of economic uncertainty. 

“Our research clearly identifies that the lingering memory of the GFC coupled with ongoing cautious consumer sentiment continues to take their toll on many retailers,” he said.

But at the same time, retailers are far more focused on investment in marketing than their peers in other industry sectors. Retailers are almost twice as likely to see investing in technology as important for 2011 compared to all businesses, reflecting their recognition of the need to embrace new modes of business in order to help their business perform more effectively. 

“However, on a positive note, it is evident that retailers are clearly appreciative of the challenges they face around marketing to new customers in 2011 in order to increase revenues, as well as a clear recognition of the need to focus on technological solutions to help them improve their business’s bottom line,” Osrin said.