Small business sales improved in June to be 6.6% higher year-on-year, according to an ANZ report, although non-retail and service sector small businesses continue to outperform those in retail.
Released monthly, ANZ’s Small Business Sales Trends report is based on the value of credit and EFTPOS transactions processed through ANZ systems, and ANZ card transactions processed through other systems for businesses at least two years old with annual turnover less than $5 million.
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The latest report shows an improvement in June small business sales, with the growth led by the non-retail and services sector, highlighting retail’s ongoing struggle to spark sales.
While overall small business sales improved by 6.6% year-on-year, retail-related sectors improved by only 4.4% year-on-year. This compares to non-retail and service sector small businesses, which improved by 8% year-on-year.
Ivan Colhoun, head of economics and property research at ANZ, says the best performing sectors were business services and trades, while automotive small businesses also had a good month.
“Hotels and motels also appear to be outperforming the retailers, with relatively higher year to date average growth [of 3.9% year-on-year],” Colhoun says.
Within the retail sector, Colhoun says clothing and fashion small businesses had a particularly tough month, declining by 0.5% year-on-year.
“However, small homewares, furniture and food businesses appear to have experienced some relief this month, up 5.4% and 8.1% year-on-year,” he says.
ANZ says the data confirms that retail is still lagging, particularly with more spending now happening in non-retail, services and food.
The report comes on the back of an announcement by Premier Investments that it will close 50 of its stores and cut staff numbers in a bid to return the business to profitability.
Premier Investments, which owns Just Jeans, JayJays, Portmans, Dotti, Jacqui-E, Smiggle and Peter Alexander, couldn’t confirm which stores would close or how many jobs would be lost.
However, chief executive Mark McInnes has blamed landlord rents as a major contributing factor in the company’s decision.
McInnes said earlier this week rent was a “constant tension” between the group and landlords. While McInnes didn’t name any landlords, it’s believed the comment was aimed at retail giant Westfield.
“There are some excellent centres in the country where you’ve got no problems paying market rent and market rent reviews,” he said.
“Then there are a whole host of other centres that are not performing, where the landlords are continually trying to pass increases through to manage their business model.”
Russell Zimmerman, executive director of the Australian Retailers Association, believes small retailers have an opportunity to downsize as rents continue to skyrocket.
“There is a trend towards the renting of floor space to multiple retailers, usually those who are selling their own designs or have a small business with a niche product offering,” he says.
“This is a low-risk opportunity for business owners to put their brand out there while also keeping products and services fresh for consumers.”
Zimmerman is hopeful the shift towards smaller shop fronts will see rents come down because “if landlords can’t fill their shopping centres, they can’t charge the rents they’ve charged in the past”.