Small businesses losing custom to larger orgs


Despite voicing a preference for ‘shopping small’, Australian consumers are increasingly transacting with large organisations, further widening the gap between small and big businesses in the spend stakes, according to new research from American Express.

Commissioned by American Express in support of its month-long Shop Small campaign, which runs throughout November, The Economy of Shopping Small: Customer Counts Report shows a majority of consumers believe more small businesses are shutting than opening, despite national data and owner feedback suggesting otherwise.

The report also reveals that over a two-year period, larger businesses have made net gains among consumers who traditionally prefer to shop small. While four in five consumers (78%) said small businesses have had a positive impact on their lives, only 37% increased the number of times they shopped small in the past 12 months, whereas 61% expanded their custom with large businesses over the same period.

‘Consumers should make their support crystal clear’

The Shop Small campaign is supported by Federal Small Business Minister Michael McCormack, who encouraged 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% of all Australian businesses,” Minister McCormack said.

“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.”

“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 findings from the report demonstrate that for small businesses, winning consumer attention and custom away from larger organisations is a challenging, in part, due to a perception problem.

Compared to 10 years ago, 83% of consumers believe small businesses are not lasting as long, while 71% said there appear to be fewer small businesses. Similarly, just under a third (30%) said the number of small businesses in their area had declined – rising to 44% in country and rural areas. These beliefs are in stark contrast to the small business sector’s actual performance, with the report revealing 85% of its organisations are in a better or similar financial position as they were last year.

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”

She continued, “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.”