Retailers face spending slump

NATIONAL: Small and medium enterprises (SMEs) are more concerned about the current economic climate than any other sector, new research has shown. A survey by the Australian Retailers Association (ARA) found the most common concern for Australian retailers in September was a lack of work and sales which was reported as a problem by 22 per cent of retail SMEs.  

The other factors influencing retailer confidence included increasing petrol prices, a slowdown in consumer spending, rising interest rates, economic downturn and increased cost of living.

ARA executive director Richard Evans said with a drop in sales and profitability and increasing concern about the current economic climate it was not surprising 30 per cent of retailers indicated they had reduced their cost base in the past quarter.

Evans said what was of most interest was that the second most frequent response to the current economic climate was that retailers were advertising more with 16 per cent of those surveyed - a five per cent increase - reporting using this strategy.

"This is a positive indication that retailers are starting to understand you can't compete on price alone in terms of economic uncertainty. Rather than focusing on making products cheaper, retailers are injecting dollars into advertising campaigns and thinking strategically about how they can give consumers. . .  a reason to shop."

Evans said he was concerned by the findings that showed 13 per cent of retailers had yet to take any steps to adapt to business trading conditions.

"Australian retailing is in a period of change and the current economic uncertainty is a great source of opportunity for retailers. To grow and prosper, retailers must be adaptable to the new conditions."