AUSTRALIA’S SMALL BUSINESSES STRUGGLING TO KEEP CUSTOM

31-Oct-2016 12:00 AM

Research reveals “Custom Conundrum”, whereby consumer support for small business fails to translate into action

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New research released today shows, despite deep-grained affection for Australia’s small business community, consumers are increasingly turning to large organisations to satisfy their buying needs, with an alarming gap developing between the frequency at which Australians are shopping within each sector.

The Economy of Shopping Small: Customer Counts Report, a study commissioned by American Express in support of this year’s Shop Small campaign, also shows that a majority of respondents believe more small businesses are shutting than opening, despite national data and owner feedback suggesting otherwise.

The report reveals a two-year declining trend, with larger businesses making net gains among consumers who traditionally prefer to shop small. While 78 per cent of respondents say small businesses have had a positive impact on their lives, only 37 per cent increased the number of times they shopped-small in the last 12 months. A staggering 61 per cent expanded their custom with large businesses over the same period.

The Shop Small campaign, supported by Federal Small Business Minister Michael McCormack and founded by American Express, continues to shine the spotlight on small business throughout November and encourages Australians to think local for their next buying decision.

“With more than 2.1 million small businesses employing more than five million Australians, the sector accounts for 97 per cent of all Australian businesses. It just makes good sense to have a thriving small business scene in our country and to ensure Governments, consumers and Australians support it as best we can,” Mr McCormack said.

“But there is more to do to set new and established business owners on a course for success. Each day every Australian should ask ourselves what we can get from our local stores or the latest online boutique. There’s no better time than Shop Small month to start that movement, making our intentions and support crystal clear, particularly as the retail sector picks up in the lead-in to Christmas.”

Small businesses struggle with a perception problem

The extent of the challenge for small businesses to grab consumer attention and custom from larger organisations is demonstrated by findings from The Economy of Shopping Small.

Compared to 10 years ago, 83 per cent of consumers believe small businesses are not lasting as long, while 71 per cent said there appear to be fewer small businesses. Similarly, just under a third (30 per cent) said the number of small businesses in their area had declined – rising to 44 per cent of respondents in country and rural areas.

These beliefs are in stark contrast to the small business sector’s actual performance, with the report revealing 85 per cent of its organisations are in a better or similar financial position as they were last year. Simultaneously, one in five Australians are actively planning to set up a small business to further their career ambitions, outlining the importance of giving the sector the economic support it needs.

Discussing findings from The Economy of Shopping Small: Custom Counts, Katrina Konstas, Vice President Small Merchant, Global Merchant Services at American Express, said Australians must convert affection into action – especially the growing number that see a future for themselves in the sector.

“This year’s research unveils a “custom conundrum” in how Australians view and engage with small businesses: we acknowledge that we’ll miss small businesses when they’re gone, but we don’t always see them when they’re there. Small businesses are no longer just bricks and mortar stores on the high street, but new digital start-ups, online boutique stores, and internet based services. We all have a stake in their success, whether it’s preserving a sense of community or providing a family member or friend with employment. Investing in their future is investing in your own and Australia’s, whether you want to run your own small business, work in one, or shop at many,” concluded Ms Konstas.

Additional findings from the American Express study, The Economy of Shopping Small: Customer Counts included:

  • Small businesses have left – and continue to leave – a positive legacy on those consumers using them, and within the wider community. Namely:
    • One in eight respondents aged 65 and over are still using small businesses their families used when they were growing up
    • 78 per cent of respondents have been profoundly touched by small businesses
    • 36 per cent say their parents owned a small business
    • 16 per cent say they met their partner at a small business
    • Half (47 per cent) give their small business work experience credit for later success
  • The widening gap between small and large organisations is also demonstrated by the following findings:
    • One in five respondents decreased the number of trips they made to small businesses in the last 12 months, while less than 1 in 12 reduced their number of trips to large outlets.
    • Certain sectors are struggling in the war for walk-ins: only 10 per cent of respondents shop small for travel and accommodation, 11 per cent for retail fashion, and 25 per cent for professional services.
    • When presented with a choice, just under half (48 per cent) of Australians say they prefer to buy from small businesses rather than larger ones
    • 42 per cent of respondents say they often make a conscious decision to buy from small businesses rather than larger ones

Protecting Australia’s national spirit

To celebrate Australia’s small businesses community and its valuable contribution to the national economy, American Express commissioned cultural archivist and photographer, Eamon Donnelly, to embark on a road trip across the country to capture the faces and stories of some of the great Australian small businesses.

The images will be showcased on the American Express Australia Facebook page during Shop Small.

To encourage its own Card Members to shop in small businesses throughout November, American Express will provide a $10 statement credit to those Card Members who have registered their cards and purchase from a small business in the Shop Small promotion. Card Members will receive the credit each time they spend $20 or more in participating businesses – up to 10 times.

To participate in Shop Small simply shop at your local business in November. To learn more ways to show your support visit www.shopsmallaustralia.com.

                                                                               ENDS

About Shop Small

Shop Small is a nationwide movement that brings together support from the business community, governments and consumers to support small businesses. Shop Small begins on 1 November 2016 and runs for the entire month. Consumers and businesses should visit www.shopsmallaustralia.com for more information on the program and its benefits.

Shop Small is founded by American Express. #ShopSmallAU

To download a copy of The Economy of Shopping Small: Customer Counts please visit: http://amex.co/2dGoC0x

To download images from the launch of Shop Small and to access images from Eamon Donnelly’s road trip around Australia, please email contacts below.

Like American Express Australia on Facebook here

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For more information or to organise an interview, please contact:

Gemma Higlett                                                       Anastassia Keltchina

Ogilvy Public Relations                                          Ogilvy Public Relations

E: Gemma.Higlett@ogilvy.com.au                         E: Anastassia.Keltchina@ogilvy.com.au

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About American Express

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Topic: Retail

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