Christmas slump for small business sales

Small business retailers had a slow December quarter, posting 0.9% fewer sales than in 2011 because of poor consumer confidence in the market.

The ANZ Small Business Sales Trends report for December indicated small business sales rose by 2.8% to the December quarter in 2012, but growth weakened in the final months of the year.

Growth continued to be strongest in the mining states, with Western Australia and the Northern Territory having notable sales increases.

Sales figures in Western Australia increased by 4.8% compared to a year ago, while the Northern Territory recorded a 6% increase.

ANZ head of Australian economics, corporate and commercial banking Justin Fabo told SmartCompany the growth in Western Australia and the Northern Territory was buoyed by the mining industry, but growth rates may be stabilising.

“Western Australia and the Northern Territory are the big mining states and have had the big spill over from the mining activity.

“But even in Western Australia the growth there has already moderated from very fast rates and we’ve seen that reflected across other areas, such as unemployment rates too,” Fabo says.

Overall, the market was slowing in momentum toward the end of the year, but positive sales figures in October thanks to the AFL and NRL grand finals boosted growth percentages.

The businesses services industry and the automotive product sector performed well, up 5.5 % and 5.3% respectively.

“In general, the services and food industries have been growing more strongly than goods.

“With business services, our guess is that there has been a bit of spillover growth from mining there. When you look at other information, like employment data, the spillover is clear,” Fabo says.

Western Australia’s jobless rate was at 4.3% in December, compared to the nation’s unemployment figure of 5.3%.

In contrast, Queensland’s small business growth weakened throughout 2012, with December quarter figures indicating only a 1.4% increase compared to the previous year, reflecting the state’s underperforming labour market.

Similarly, the ACT and Tasmania were particularly weak, with sales falling by 0.3% in the ACT compared to December 2011. Victoria’s growth remained soft at 2.4%.

Despite being Christmas time, Fabo said consumer spending habits were influenced by global uncertainty.

“A bit of momentum was lost at the end of last year, but that’s not surprising because of the uncertainty of the global outlook and consumers pulled their head in a bit with their spending,” he says.

ANZ general manager of small business Nick Reade said in a press release that around Christmas time, consumers favoured the price cuts offered by big businesses.

“Small business owners often can’t afford to discount their products or invest in marketing to bring in more customers, whereas larger businesses have greater flexibility when it comes to both pricing and marketing.

“This may have been particularly pronounced during the Christmas sales period,” Reade said.