By Aimee Chanthadavong

It may seem that Australian SME retailers believe Christmas will be a tough period for them, according to the latest MYOB Business Monitor.

Speaking to Retailbiz, Julian Smith, MYOB general manager, said things are getting harder and tougher for Australian retailers, particularly due to interest rate hikes and the strong Australian dollar, which is pushing consumers towards offshore retailing.

“Looking at results for the fourth quarter, it basically shows the economic environment falling right off the cliff with only 20 per cent of retailers surveyed believing that trading won’t be tough while more than 24 per cent are seeing it get worse. Retailers’ prediction for the Christmas trading period is lean. We’ve never seen a sales pipeline fall this low in the eight years that we’ve doing this survey,” he said.

“Looking at the economy, there were very challenging times during the federal election where things basically came to a halt as it caused a lot of uncertainty. The increasing of interest rates also meant there was less disposable income to spend in the retail sector, there was also lower margins and great discounting, which put greater pressure on retailers on increasing profits. This led to more competitive pressure and retailers have been basically baring the brut of all those economic pressures.”

The results also found 36 per cent of SME retailers report lower revenue than 12 months ago, with the average drop being 25 per cent. A more concerning finding for Christmas sales is that almost a quarter (24 per cent) of retailers report that they have less work in their three month sales pipeline than usual.

Smith suggests that SME retailers need to be proactive by investing in technology, which will make them more robust and better equipped to weather tough market conditions.

“The key thing is having a presence and participating in that online economy as it the number one opportunity and an enormous channel to get your name out there. The key to doing that successfully is all about being found in your market through having a well designed website where products can be found easily,” he said.

“This can either be through promoting the website, search optimisation or getting expert advice. The problem that many retailers come across is creating one that becomes a billboard in the desert and it just sits there with little point. So retailers need to keep in mind that a website can be used to sell.”

The Business Monitor found that in Australia, only 35 per cent of businesses have a website while 36 per cent of those being retailers have a website. Meanwhile only 20-35 per cent sell online. This is in comparison to New Zealand retailers where 48 per cent own a website and 38 per cent those sell online.

“It’s because trading conditions have been quite challenging during recession so retailers in New Zealand have had to reinvent the way they go to market and that’s a real opportunity for Australian retailers, especially with the strong Australian dollar. It’s our view many consumers are shopping online in the global economy so the opportunity for Australian retailers is to get online and take advantage of the growth."

Despite the tough conditions ahead, Australian retailers are optimistic about the future with predictions that improvements will come in the next 12 months.

“Australian businesses are confident bunch and are optimistic after the future. So we’re always asking about confidence. When we surveyed businesses in general, 47 per cent expect business to improve in the next year while 44 per cent believe it’ll take more than 12 months. Meanwhile, retailers were optimistic with 54 per cent of retailers believe business will improve in the next year while only 37 per cent will take more than 12 months.”