Small Australian bricks-and-mortar retailers are predicting a shift to digital in order to survive, according to new data from the Shopping Small report, commissioned by American Express.
48% of those surveyed predict that their business will operate entirely online in the future, with 26% of these businesses expecting this to happen in the next three years.
46% of retailers also expect that online channels will account for at least half of their sales in three years' time, regardless of what their future operations look like.
However, while operating online might be seen as many retailers' future strategy, the research reveals that going digital comes with challenges.
The report found that today's online small businesses are likely to; fear insolvency in the next three to five years with 37% of online businesses fearing this compared to 32% of bricks-and-mortar retailers; expect declining or flat revenue in the next year (55% online vs. 34% bricks-and-mortar); and, feel less optimistic about the future of the small business sector (33% online vs. 41% bricks-and-mortar).
Retail Doctor Group founder and CEO Brian Walker said that Australian consumers are driving this shift.
"It’s promising to see Australian small businesses are considering new and agile approaches to business, but this is becoming a necessity when two-thirds (65%) of consumers believe small businesses need to go online if they are going to survive.
"Despite this, the research shows there is a disconnect when it comes to the performance of online businesses.
"This could be in part due to increasing competition online, as well as a need for more early stage support for new operators. With the right backing and strategies in place, small businesses can succeed both on and offline.
"Ultimately it comes down to providing an excellent experience that customers will come back for time and time again," he said.
The report also investigated how prepared small businesses are to shift to an online model and found that; 10% of small businesses have a forward-thinking culture; 40% are currently investing in technology; and, many are intending to invest in technology such as a website (15%), customer service technology (14%) and data analytics and automation (12% each).
The research also found that many small businesses are using social media to grow their businesses. 20% of small operators have launched or become more active on socials in the last year to help grow their businesses while 31% would like to do so.
American Express VP of small merchants Lisa Belcher said that small Aussie businesses need to be supported throughout this shift.
"While the future of Australia’s small business sector is still to be written, we can’t take these businesses for granted.
"Whether they be online or physical stores, we need to ensure there is adequate support in place to help businesses navigate these changes and ultimately thrive.
"Encouraging a forward-thinking and innovative small business community will not only help future-proof the 2.1 million Australian small businesses that serve our local communities, but will help to drive positivity in both consumers and small business owners," she said.