“Tumultuous economic conditions”: 91% of SMEs feeling the cost pinch

Australian small retailers are failing to meet their financial benchmarks, as softening consumer spending, rising wages, and inflation threaten business survival.

An inaugural Small Retail Index study by the Australian Retailers Association (ARA) and American Express, revealed that 32% of small and medium businesses are feeling uncertain about the year ahead.

The survey studied 400 retailers nationwide with retail turnovers of below $50 million between May and June.

It found that more than 91% of SMEs have seen business costs increase in the past 12 months while 32% stated that costs increased by more than 10%, which is above the level of inflation.

The rising cost of doing business is attributed to wage pressures, the cost of goods and services, and cash flow management, the study highlighted.

“We are concerned about the outlook for small retailers in these tumultuous economic conditions and the toll these pressures are taking,” said ARA CEO, Paul Zahra.

“Small businesses are the cornerstone of our economy and it’s vital that they receive adequate support.”

Zahra flagged that this financial year brought forth a “perfect storm” for retail as spending slowed down combined with the rising cost of doing business alongside government reforms and retail crime.

This article was first published by Inside Retail.