Small grocery retailers are facing the toughest competition when it comes to sales, Roy Morgan research reveals.

According to the Roy Morgan Business Single Source report, 55 per cent of small food retailers in Australia such as grocers and convenience stores report the competition affected business performance in the last 12 months. This is 23 per cent points higher than for small businesses across all industries, and 12 per cent points higher than the average small retail businesses.

More than one in two small hardware and gardening (53 per cent) and electronics (52 per cent) retailers also rate competition as a determining factor on overall business performance, whereas competition is less fierce among small clothing and footwear (42 per cent) and furniture (37 per cent) retailers.
At the same time, the research found 54 per cent of small food retailers report underperforming in the past year – 7 per cent points above the small retail average. Nevertheless, despite high levels of competition 45 per cent of small food retailers have a confident outlook for 2013 and expect overall business performance will improve.

“The Australian Competition and Consumer Commission’s (ACCC’s) renewed interest in the competitive environment for food retailing is timely, as many small retailers—particularly food retailers—are facing difficult conditions in 2013,” Nigel Smith, Roy Morgan Research, director of business research, said.

“Small Food retailers and Hardware and Gardening retailers are almost twice as likely as the average small business to expect to face increasing competition over the next 12 months.

“Competition only benefits consumers when it’s maintained in the long term. Predatory pricing by larger retailers—and increased take-up by price-conscious consumers—may lead to fewer competitors, an ultimately detrimental situation for both consumers and the retail industry.”