Tough times Ahead for Small Business Owners
One of the greatest indicators of consumer spending is consumer confidence. Evidently, Australians are feeling cautious about the Australian economy in the immediate and foreseeable future. This is likely to cause a dip in spending, impacting many small businesses.
Latest Update
This week, there has been a broad-stroke decline in consumer confidence, falling across all mainland States, which hasn’t occurred since early August. The ANZ Roy Morgan Consumer Confidence Index dipped by 1.1 points to 81.1 this week, and is now 9 points below the 2022 weekly average of 90.1. It sits 25.7pts points below the same week last year, on October 23/24, 2021 (106.8).
In the next 12 months:
More than a third (34%) of Australians are bracing for tough economic times ahead. Only 7% expect good times for the economy.
23% of Australians believe they are financially better off than this time last year. However, 46% of Australians believe they are worse off financially.
Looking into the future:
Less than a third (29%) of Australians expect to experience financial improvement this time next year. 34% of Australians expect to be worse off.
The general sentiment amongst Australians regarding the economy has taken a sharp decline. Over the next five years, only 7% of Australians predict economic good times. The prediction for tough economic times has spiked to 40%.
Photo by Towfiqu barbhuiya on Unsplash
The Future for SME’s
So, what does this mean for consumer spending patterns and its impact on small businesses?
During times of high consumer confidence, people are more likely to feel comfortable spending. In particular, they are more likely to spend on luxury items, and discretionary purchases. This directly affects many businesses, and the impact can be especially significant on small businesses with tighter profit margins. The supply or demand balance shifts, and the supply chain is impacted by a decline in consumer spending.
The culmination of negative news last week weighed on Australian consumers. ANZ head of Australian economics, David Plank, explained, “The jump in inflation expectations, likely linked to the end of the temporary petrol excise cut and uptick in petrol prices, weighed on sentiment. Consumer confidence will remain fragile as long as market volatility is the dominant theme globally. The RBA’s October rate decision will also impact in the near-term.”
Make sure your business is prepared and your online channels (website, paid media and social) are working to their full potential. If you feel there could be improvements and you would like an independent point of view then contact IDA.
You can read a full breakdown of the latest findings on the Roy Morgan website in this link: ANZ Roy Morgan Consumer Confidence Index
