Australians are becoming less inclined to support SMEs, as the cost-of-living pressures have driven them to seek value at bigger retailers.
According to new research from Money.com.au, half of Australians say they only support small businesses “if they can afford it”, with nearly a quarter planning to cut back on small business spending first when budgets tighten.
The findings highlight the difficult position facing small businesses, as customers becoming more cautious is coupled with pressures from higher wages and new Payday Super obligations. Softer demand also means that SMEs have limited room to pass on higher costs without risking a further hit to sales.
Sean O’Malley, group executive of AMP Bank, said that the research reveals a growing gap between intent and behaviour.
“People still want to shop local and support small businesses, but many are being forced to choose the cheapest option available,” O’Malley said.
“Nobody is blaming Australians for looking for value right now. Cost-of-living pressure is real.
“But if small businesses are forced into a race to the bottom that they can never win, ultimately, we all lose,” he added.
Several SME owners confirmed they have suffered from falling sales as the cost-of-living pressures force consumers to watching every dollar they spend.
The issue was exacerbated by rising costs from suppliers, they said, adding that it is increasingly difficult to compete against larger players with more advantages in scale, funding and visibility.
This article was first published on Inside Small Business.
