With just a few weeks until Christmas Day, small businesses are entering their busiest trading period. As they brace for the full, festive impact of the silly season, MYOB has released data, collected from 1,000 Australian consumers, that shows some of the decisions they are making about their spending. Here’s what we know, writes Emma Fawcett, General Manager SME at MYOB.
With rising costs of living impacting how consumers shop, small and medium-sized businesses may need to get creative in order to capture savvy purchasers – with a quarter (26 per cent) of survey respondents looking to spend less this year than in the last few years around Christmas.
In good news for local businesses, respondents have a firm preference for products made in Australia – with 59 per cent looking for locally produced goods and 51 per cent willing to pay more for them.
However, brand loyalty has been impacted as cost of living and inflationary pressures hit households, with 63 per cent of shoppers making purchasing decisions based on price over store preference. This comes as 43 per cent of respondents report having their income impacted this year; of this, 86 per cent have seen it decline.
While there’s no doubt an online presence is crucial for retail stores, many consumers still prefer to search for the perfect gift in person. The data shows 45 per cent of consumers prioritise shopping in store at local shops or neighbourhood shopping centres. So, business owners can still expect to see a reasonable amount of foot traffic.
With these insights in mind, there are some useful takeaways for small businesses to keep in mind to get the most out of the festive season.
Tips to prepare for a busy Christmas trade
1. Make last-minute adjustments to inventory
No matter the size of your business, you should have a sound idea of demand in the lead up to Christmas. A busy retail period is a great time to run special offers, so ensure you have the appropriate balance of stock to meet customer demand and factor this into any promotions of your product.
If you haven’t focused on inventory before, keep it in mind this year to help you in the future. Digital record-keeping of your stock will allow you to effectively manage your inventory. As your products fly off the shelves, you can tweak your offers as you go.
2. Take advantage of increased foot traffic in store – but balance with wages, opening hours and demand
Christmas shopping gets earlier every year, and most will have started weeks ago. MYOB’s recent research found 46 per cent of consumers rely on Black Friday sales at the end of November to save money on Christmas shopping.
Despite the surge in online shopping and growth in late November cyber sales, many Australians will still make their Christmas purchases in person at local stores and all the way up to Christmas Eve – so there’s plenty of time to maximise the Christmas rush.
Many of these will be shopping after work or late into the evening. Not every business should attempt to increase their hours, particularly as wages increase by 25 per cent after 6pm, but if you are expecting an increase in foot traffic, assessing opening hours is important.
3. Connect with your customers through digital marketing approaches
All business owners, particularly those in retail, should have a presence on social media so they can engage directly with customers – sharing opening hours, events, product launches. Utilising digital marketing approaches like eDMs can also be valuable, even without an online store.
Ensuring your customers know you’re a small, locally-owned business may also drive more support for your store, so be sure to add it to your digital presence.
4. Assess your prices against consumer demand – but don’t necessarily let them dictate your worth
While 51 per cent of survey respondents consider price as the most important aspect of their purchasing decision, business owners should focus on the ways they can demonstrate the value they offer, such as clearly stating that products are locally-made.
Consumers have competing priorities and differing spending patterns. Many will be happy to pay extra for a well-made piece of clothing – perhaps look to add extra value to an offering, like free alterations. Another way you can add value is by adding something extra into a customer’s basket at no extra cost.
Despite consumers taking a cautious approach to spending this year, the lead up to Christmas is still a great opportunity for small businesses to demonstrate what they offer and make the most of the season.
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