A new study conducted by digital marketing and automation platform Constant Contact has revealed that small-to-medium enterprises (SMEs) in Australia and New Zealand are feeling the brunt of inflation more than the United States, United Kingdom, and Canada.
The company’s Small Business Now: Holiday Crunch report found that 60 per cent of ANZ consumers are reducing spending at SMEs – the highest of any region polled. Amidst this situation, 43 per cent of ANZ SMEs have increased costs to combat inflation – slightly below the global average (44 per cent).
“Small businesses make up almost 98 per cent of businesses in Australia and New Zealand and supporting them right now will genuinely help some of these businesses survive the economic storm,” said Renee Chaplin, VP Asia Pacific, Constant Contact. “Big businesses have the economy of scale to weather inflation and decrease costs in the face of competition. But small businesses are rarely in this position and instead need to find ways to stay top of mind and connect with the community to keep them coming back.”
Holiday season a missed opportunity for SMEs
Previous data from Bazaarvoice reported that around two-thirds of Australians don’t start their holiday spending until the final quarter. The Small Business Now: Holiday Crunch report presents a similar number; it found that 72 per cent of ANZ consumers typically only start thinking about end-of-year spending from October onward.
While 26 per cent of shoppers begin their end-of-year spending in October, 28 per cent start in November, and 18 per cent in December.
Interestingly, ANZ SMEs are less reliant on spending over the Christmas and New Year period to boost spending than their global counterparts, with only 29 per cent feeling the most pressure to drive revenue during this period.
“It’s reassuring to see that the Christmas and New Year period isn’t ‘make or break’ pressure for small business as is the case in other regions,” said Chaplin. “Although, it’s clear that SMEs are missing an opportunity to further drive revenue in what is typically the busiest spending season of the year for many industries – particularly at a time when, regardless of inflation, people are looking to spend more than usual.”
CEO and Founder of the Small Business Association of Australia Anne Nalder believed that this can be attributed to the culture in Australia and New Zealand.
“The ‘she’ll be right’ mentality in this region is a part of who we all are, but it doesn’t bode well when it comes down to a small-business owner assessing how their business is going, and whether they’ll be able to survive some of the hardest times we’ve seen for businesses in this country in thirty years,” said Nalder. “Small businesses do need to be taking opportunities to educate themselves, train their staff and promote their business.”
SMEs urged to take action
“The opportunity is there for SMEs to drive revenue at a time when local customers are looking to spend in what, comparatively to the world, is a relative flurry,” added Chaplin. “But ANZ SMEs are leaving things to the last minute when it comes to marketing and promotion.”
“When customers do have money to spend, SMEs need to have those customers thinking of them first,” Chaplin further said. “In tight economic times, being first to market and working hard to be top-of-mind is not only smart, it’s good business practice.”
“A focus on customer service should also be a priority for small businesses in the lead up to peak spending periods, which can often be an afterthought,” added Nalder. “It can really impact a business if they don’t get this right — so it’s important to make the time and invest in training of employees.”
