Australians are increasingly turning to large businesses over smaller independent retailers, with only half (55 per cent) of shoppers believing they can find almost everything they need in their small business community.
This number is down from 66 per cent in 2016, according to the Economy of Shopping Small report from American Express.
The report was launched to celebrate the American Express Shop Small campaign, a month long event that encourages shoppers to visit local businesses during November.
Katrina Konstas, American Express vice president for small merchants, says it is important for Australians to shop small because of the ‘boomerang dollar’ effect. While independent businesses have long been recognised as a source of employment—small business employs over 40 per cent of Australia’s workforce—the effect of spending money locally goes well beyond the business itself.
On average, 42 cents of every dollar spent at a small business is reinvested back into the local community. Money spent with small businesses finds its way back to communities through salaries to residents (27 cents) and payments to local suppliers (12 cents), while the remaining 3 cents is used to support and local charities, schools and sponsorships.
“What goes around comes around,” says Konstas. “The ‘boomerang dollar’ effect shows that almost $38 billion is reinvested into our communities every year through local spending—that’s a huge amount that’s going back into businesses’ tills, workers’ pockets and towards worthy community causes. Shopping small can have an enormous effect.”
American Express’ research shows that smaller retailers help drive this spend, with 75 per cent of stating they encourage their customers to shop in other local small businesses.
This collaborative approach works. In fact, retailers with strong neighbourhood networks reported increased sales through referrals (59 per cent), a sense of satisfaction from supporting neighbourhood economies (40 per cent), and increased customer reach (45 per cent), demonstrating that it pays to stick together.
However, while retailers may be banding together to attract more business, retaining customers is a major concern and 56 per cent of owners have noticed their customers are becoming less loyal.
CEO of the Council of Small Business of Australia (COSBOA), Peter Strong, says supporting small business is about investing in the place we call home. “Loyalty may be an old-fashioned concept, but when you consider that the majority of Australians have lived in their local area for three years or more, the longevity of local businesses is important.
“From years of supporting Shop Small, and the role I play every day at COSBOA, I know the importance of culture and community, which is why I encourage all Australians to join the movement this November.”
By Ruth Cooper