The annual growth, at 4.0 per cent, is the highest for the WPI since March quarter 2009.

What does this mean for SMEs?

The rising WPI is likely to have a number of implications for SMEs, including:

• Increased labor costs: SMEs will need to factor in the higher cost of labor when pricing their goods and services. This could put upward pressure on prices and potentially make it more difficult to compete with larger businesses.
• Skill shortages: The tight labor market is likely to make it more difficult for SMEs to find and retain skilled workers. This could lead to productivity losses and slower growth for SMEs.
• Wage bill inflation: The rising WPI will put upward pressure on SMEs’ wage bills. This could make it more difficult for SMEs to invest in other areas of their businesses, such as research and development or marketing.

What can SMEs do to manage the rising WPI?

There are a number of things that SMEs can do to manage the rising WPI, including:

• Reviewing their pricing strategies: SMEs should regularly review their pricing strategies to ensure that they are covering their costs and making a profit. They may need to increase prices in order to offset the higher cost of labor.
• Investing in productivity improvements: SMEs can invest in productivity improvements to help offset the higher cost of labor. This could involve investing in new technology, training employees, or implementing new processes.
• Focusing on employee retention: SMEs should focus on retaining their existing employees by offering competitive wages and benefits. They may also need to be more flexible with working hours and other conditions in order to attract and retain talent.

The rising WPI is a challenge for all businesses, but SMEs are particularly vulnerable. SMEs should take steps to manage the rising WPI in order to protect their profits and ensure their long-term viability.

Here are some additional tips for SMEs:

• Be aware of the WPI: SMEs should keep an eye on the WPI so that they can be prepared for future increases.
• Plan for the future: SMEs should factor the rising WPI into their business plans.
• Talk to their bank: SMEs should talk to their bank about their financial situation and see if there are any options available to help them manage the rising WPI.

The rising WPI is a challenge for SMEs, but it is not insurmountable. By taking steps to manage the rising WPI, SMEs can protect their profits and ensure their long-term success.

The post SMEs face rising labour costs as Wage Price Index hits record 26-year high appeared first on Small Business Connections.

The results revealed that shoppers are curbing their spending and becoming more cautious with their purchases in the current economic climate. The data also indicates consumers are relying more heavily on user-generated content (UGC), such as ratings, reviews, and shopper photos, to make decisions and that social media impacts every stage of the shopping journey, from discovery to purchase. 

In addition to Australia, the survey encompassed six other countries: the UK, the USA, France, Germany, Canada, and Spain. The data highlights that Australian consumers are among the most cautious, with 73.9% stating they have altered their shopping habits and 80.2% reporting they have cut back on discretionary spending. 

Most Australians (~66%) have also reduced spending on “practical” (described as justifiable and reasonable items) and “delayable” (shopping that can be postponed) purchases, with only UK consumers showing higher reductions. 

The only area that has seen smaller reductions is in “essential” purchases (considered necessary for survival or healthy living), with 29.2% reducing spending, 20.3% increasing it, and 49.8% maintaining previous levels. 

Further data illustrating the reduction in consumption comes from those who buy on impulse. Among these consumers buying cheaper products, only 2.8% report shopping by impulse. 

More than eight in ten Australian shoppers (80.5%) say they are relying on content from other consumers as much or more than they did last year to make purchasing decisions. They primarily seek information related to value for money (65%), products’ quality (49%), and if the item suits their intended use (45.9%). 

The survey reveals that a significant percentage of respondents feel more confident in a purchase when they use shopper content (61.7%) and are unlikely to buy a product without shopper content (39.0%). 

“This year’s study underscores the economic impact on Australian shoppers’ behaviours and their reduction in spending,” says Kate Musgrove, APAC Managing Director at Bazaarvoice. “The data also reveals how, in times like these, consumers depend even more on fellow shoppers for advice and view social media as their primary source for product discovery and purchases.” 

According to the survey, social media significantly impacts shopping behaviour, from product discovery to purchasing decisions, with 49.1% of respondents agreeing that they often discover products or services through social media channels. 

Globally, 73% of shoppers aged 18-24 have purchased something on social media in the last year, and three-quarters (76%) say they are more likely to discover a product through social media than through any other means. 

Also read: While inflation is cooling here are 6 tips to stay alert

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Lyndall Spooner, founder and CEO of Australian strategic research and consulting agency, Fifth Dimension and leading authority on matters of brand trust, states that retailers are pushing hard to get a slice of Australia’s burgeoning Facebook Marketplace and Gumtree market as the economy continues to tighten and consumers look to second-hand goods to save money.

“The economy is tipped to get tougher over the next 12 to 24 months which means that an increasing number of consumers will turn to second-hand markets to source products,” Spooner said.

“The second-hand market has traditionally been seen as a way for people who are doing it tough to save money, and second-hand goods that were not on trend had a stigma of not being desirable, hence their cheap price. Well, that mindset has been flipped on its head. Second-hand items are now incredibly popular as we broaden what is on trend in popular culture and are more encouraging of people to express their individuality. Second-hand items can offer exclusivity and an expressionism that is distinct from what is in stores, which helps set people apart when they are looking to differentiate themselves in environments such as social media.

“As a result, these markets are tipped to grow exponentially over the coming years. Clearly, retailers want a slice of the second-hand market, especially retailers selling high-value items. Launching a second-hand market as part of a retailer’s offering is a clever way of capturing a slice of the second-hand market while also expanding the retailer’s relevance and customer reach and extending its customer loyalty program beyond traditional boundaries.

“The introduction of retailer-led second-life goods programs is fast becoming the next frontier for retail. Not only will it deliver significant gains for retailers it will also deliver significant benefits for consumers.

”Consumers will be able to sell back unwanted items and purchase new second-life items at a significant discount compared to the price of brand-new items.”

Key findings:

• Retailers are pushing hard to capture a slice of the burgeoning second-hand market
• Offering a second-hand market under the retailer umbrella keeps customers connected to the brand and increases the brand’s desirability
• It also keeps customers within the scope of the brand’s loyalty program
• A retailer second-hand market also provides the brand with the ability to support sustainable practices by offering products a second life as part of the circular economy

“Already, many retailers have introduced second-hand markets and consumers can expect to see many more retailers introducing their own version of a second-hand market in the near future,” Spooner said.

“Decathlon, the world’s leading designer, manufacturer and retailer of sporting goods introduced its Second Life program in Australia this year. The program enables customers to purchase certified refurbished items at a discount of up to 50 percent.

“It also supports the recycling of Decathlon sporting equipment with environmental initiatives and provides customers with the ability to sell items no longer needed and have them prepared for a new life of use and adventure.

“IKEA has already introduced a second-hand market – Shop As Is. With IKEA’s Buy-back, customers can sell IKEA their pre-loved IKEA furniture and IKEA will give it a second, third or fourth life.”

Spooner emphasised that luxury brands in particular, as well aware of the impact of cost-of-living pressures on their customers and sales which is a key reason why many are embracing second-hand sales.

“Across the world, we are seeing brands move beyond sustainability to take control of the preloved market in order to stay relevant and connected with their customers,” Spooner said.

“Gucci, Alexander McQueen, Chloé, Lululemon are just some of the luxury brands that have embraced the second life concept in one form or another enabling customers to access preloved items in a safe and controlled manner.

“This is also helping premium brands to reduce the incidence of counterfeiting which is rife across the broader second-hand market space.  In addition to the cost benefits for consumers and the ability for brands to retain connection with their customers, retailer-led second-hand markets provide consumers with a safe place to trade second-hand items which helps to maintain brand trust.

“We are already seeing competition in resale platforms increase. The challenge for brands is to stay relevant to their existing audiences while developing tactics to increase their reach to new audiences while at the same time maintaining their brand reputation and market positioning.”

Spooner emphasises that retail brands need to now think about the benefits of designing iconic and higher quality items that can be loved by consumers and continue to be sold or used by one generation to the next. A consumer may not be able to afford the initial price, but they could afford the second-hand price. There is nothing stronger than the emotional reward of desperately wanting something and being able to finally own it, regardless of whether it is new. And in a modern world, there is now a second emotional reward knowing that something you purchased but not longer suits you can go on to be used and loved by someone else and not end up in landfills.

The Boston Consulting Group reports that the second-hand market is already worth between three and five percent of the overall apparel, footwear, and accessories sector and could grow to as much as 40 percent depending on macroeconomic conditions.

“We will see more retailers introduce second-hand markets in Australia over the coming years and the impact will be beneficial to the entire market as well as the planet,” Spooner added.

Also read: How least-cost routing can save small businesses $1 billion

The post What’s driving consumers and businesses to secondhand markets? appeared first on Small Business Connections.

Here are some tips for small business owners to navigate the current environment:

• Review your costs and identify areas where you can save money. This may involve negotiating better prices with suppliers, streamlining your operations, or reducing waste.
• Pass on some of the cost increases to your customers, but be careful not to alienate them. You need to strike a balance between maintaining your margins and keeping your customers happy.
• Focus on building customer loyalty. This can be done by offering excellent customer service, rewarding loyal customers, and building relationships with your customers.
• Offer value-added products and services. This will help you to differentiate yourself from your competitors and attract new customers.
• Have contingency plans in place in case of supply chain disruptions. This may involve sourcing supplies from multiple suppliers or holding more inventory.
• Be cautious about investment. Make sure that you have a clear business plan and that you are investing in projects that are likely to be profitable in the current environment.

In addition to these tips, small business owners should also be aware of the following government initiatives that can help them to reduce costs and improve their productivity:

• The Energy Efficiency for Small Business program provides grants to small businesses to help them improve their energy efficiency.
• The Instant Asset Write-Off allows small businesses to immediately write off the cost of eligible assets worth up to $20,000.
• The Small Business Tax Offset provides a 16% tax offset for small businesses with an annual turnover of up to $50 million.

Small business owners can also access a range of support services and advice from the government and other organizations. For example, the Australian Small Business Advisory Services (ASBAS) provides free and confidential advice to small businesses.

By taking advantage of these resources and following the tips above, small business owners can increase their chances of success in the current challenging environment.

The post While inflation is cooling here are 6 tips to stay alert appeared first on Small Business Connections.

Key Finding from PayPal:

• Majority of Australians (75%) planning to spend less this Christmas – up
  from 40% last year
• No. 1 strategy for keeping costs manageable is to shop the online sales
• 81% of Aussies will buy gifts online this year
• Half of Australians (49%) say you can still have a great Christmas if you
  spend wisely

The top strategy Australians are using to keep Christmas costs in check is to shop online during the sales periods, with 38% saying this is their go-to method. This is followed by half of Australians (49%) who said you can still have a great holiday season if you spend wisely, leverage the online sales and shop sensibly.

This year, most gifts will be purchased digitally with 4-in-5 Australians (81%) buying gifts online and 62% of Australians saying they will buy at least half their gifts online. This reflects that half of Aussies (47%) say the worst thing about Christmas is the overcrowded stores. Other reasons Australians shop the sales online is to have a faster and easier shopping experience (42%) and get better deals and prices (40%).

While 75% of Australians will be spending less this festive season, not everyone is cutting back in the same way. Some will be spending less on gifts (39%), others less on decorations and lights (also 39%), alcohol and drinks (35%) or travel and fuel (34%). A quarter of Australians (25%) say they’re not cutting back their spending at all this year.

PayPal Australia’s Head of Consumer, Jon Ashe, said that the research shows that Australians are still looking forward to Christmas, but they are being more mindful of their spending.

“It’s clear that Australians are feeling the pinch of the rising cost of living, but they are still determined to enjoy Christmas,” Ashe said.

“Shopping online during the sales periods is a great way to save money and get the best deals on gifts. PayPal also offers a number of features that can help Australians manage their spending, such as the ability to set a budget and track their spending.”

The research also found that the biggest concerns for Australians this Christmas are the increased cost of groceries (63%), the high cost of fuel (52%) and the cost of energy and utility bills (51%).

“We understand that many Australians are feeling financially stressed this Christmas,” Ashe said.

“PayPal is committed to helping Australians save money and have a great holiday season. That’s why we’re offering a range of features and benefits to our customers, such as PayPal Honey, which can help them find discount codes and offers, and PayPal PayLater, which allows them to spread the cost of their purchases over time.”

Also read: Burnout and inflation: working Australians need a break, but can’t afford one

The post Why 75% of Australians plan to spend less this holiday season appeared first on Small Business Connections.

Christmas Crawl and Cost of living – Aussies need time off, but most can’t afford it:

• 3 in 4 (75%) adult Australians attribute their desire for an early break to late-year burnout, shedding light on the cost of living and the need to manage stress.
• Aussies have humble holiday budgets amidst the rising cost of living, showing the average Australian typically spends just over three thousand dollars ($3,182) on a domestic holiday.
• More than 9 in 10 (95%) prefer off-peak travel with lower crowds and prices.
• Over 3 in 4 (78%) respondents would choose to travel within Australia rather than overseas for their second-half 2023 holiday, a trend that may be related to the rising costs and reduced travel budgets.

Executive Director, Tourism NT, Tony Quarmby shared a potential way for Aussie workers to recover: “This recent data suggests that many Australians are seeking a different kind of holiday this summer – and there’s no better place do summer differently than the Northern Territory. Summer starts early in the Territory from September, offering a massive range of unique experiences to excite, enliven and refresh before the hustle and bustle of the festive season kicks in, and beyond.

With affordability being key for many Aussies at this time of year, summer also presents a great time to travel to the Territory. Summer in the NT is ‘off peak’, which means lower prices, less crowds and more chances to explore, play and breathe.”

The post Burnout and inflation: working Australians need a break, but can’t afford one appeared first on Small Business Connections.

Compared to other XSBI countries (NZ, UK, USA, Canada), Australia is the best-performing country in terms of sales growth, despite a slight drop in performance in the September quarter.

Key insights from the Index (covering July — September) include:

• The Xero Small Business Index fell 2 points in September to 121 points. For the three months to September, the Index averaged 122 points, which is marginally lower than the average for the first half of 2023 (127 points).
• Sales growth continued its slowing trend, with sales rising just 5.5% year-on-year (y/y) in September — the smallest three-month sales rise since the first three months of 2021.
• Health care (+13.2% y/y) and education and training (+10.5% y/y) have seen the highest sales growth, while the weakest industries were agriculture (-6.2% y/y), wholesale trade (-1.1% y/y).
• Wages growth continued to slow, rising just 1.9% y/y in September — the smallest monthly rise since December 2020.
• Jobs growth remained steady, increasing by 3.0% y/y in September and 2.7% y/y in the three months to September.

Payment times were also broadly similar to the first half of the year result of 22.8 days, with small businesses waiting to be paid 22.7 days in September.

The post Despite challenges, Australia tops global peers in small business sales growth appeared first on Small Business Connections.

Robert Ewing, ABS head of business statistics, said the Manufacturing industry reported the largest monthly jump in business turnover.

“The 6.4 per cent rise in turnover for Manufacturing can be largely attributed to Primary metal and metal product manufacturers, led by businesses involved in precious metal production. Transport equipment manufacturers also contributed to the rise.”

Arts and recreation recorded the second largest rise in turnover (+6.0 per cent), partially recovering from a 7.4 per cent fall in July this year.

Retail trade businesses also saw an increase (+3.6 per cent) driven by fuel retailing and new motor vehicle sales.

Other services (-2.6 per cent), Information media and telecommunications (-1.6 per cent), and Administrative and support services (-1.5 per cent) recorded the largest falls in turnover.

Ten of the 13 industries included in the indicator recorded rises compared to August last year. Increases over the year were led by Construction (+19.2 per cent) and Other services (+9.2 per cent), while Electricity, gas, water and waste services and Mining fell 22.3 per cent and 16.5 per cent respectively.

The post Business turnover showing signs of positive rebound appeared first on Small Business Connections.

“This minor softening in demand is no cause for concern, says RCSA CEO Charles Cameron.

“The Australian job market has shown incredible resilience against economic challenges, nationally and globally. The data suggests we are in a re-adjustment phase. All things considering, the market appears to be very healthy. Unemployment has only slipped 0.2% in the past year.”

The data is promising after concerns the Australian jobs market could follow the same trajectory as New Zealand where we saw a massive 10.8% retraction in job opportunities in the second quarter of this year.

“With immigration flowing again and more workforce participation post covid, employment in Australia has risen considerably. In saying that, we still have acute skills shortages in many sectors, especially nursing, aged and childcare,” says Cameron.

Immigration appears to be helping to plug some of those gaps and easing demand. In the past three months postings for Healthcare and Social Assistance workers decreased 8.4%.

Another positive sign is that the latest data indicates employers are still keen to lock in permanent staff, rather than maintain flexibility with a non-permanent workforce. In the past three months, advertising for permanent jobs only dropped 1.3% while ads for flexible, temporary and contract workers dipped 5.6%. In the past year demand for flexible workers has decreased 10.5% whereas opportunities for permanent positions rose 4.2%.

“This data shows business confidence across the country is strong. When employers are nervous, they traditionally favour a flexible workforce so they can scale their operations up and down to suit the climate. The continued strength of permanent work opportunities is likely because employers are looking to lock in talent in a skill short market.”

The industry where we saw the biggest peak in demand for staff was in Food and Accommodation. Job postings increased 19.9% in the last quarter. The seasonally adjusted data indicates a higher-than-normal drive in hiring ahead of summer. The biggest decline was in Education and Training. The dip was unexpected after healthy levels of demand over the past 10 months.

Key Statistics – advertised jobs:

• Accommodation and Food Services, up 19.9%
• Education and Training jobs down 26.1%
• Healthcare and Social Assistance down 8.4%
• Manufacturing and Distribution up 12.2%
• Mining, Construction and Utilities up 7.2%
• Health, Education and Community Professionals down 10.6%
• Technology Professional down 15.2%
• Clerical and Administration down 8.2%

Th Jobs Report can be viewed in full here

The post Why job opportunities are slipping, but Australians shouldn’t panic appeared first on Small Business Connections.

The average employee growth for the Science, Information and Communication Technology sector saw a -0.1 monthly decline, while the median hourly rate dropped by -1.8 per cent (despite all other key industries seeing a slight monthly increase in the median hourly rate). Science, Information and Technology also experienced the smallest annual change to the median hourly rate (2.5 per cent) compared to all sectors.

However, the industry still holds the highest median hourly rate of $57.08, far above other sectors, which signals these slowing growth rates are likely a rebalancing of the tech industry as valuations and salaries return to earth.

Ben Thompson, Co-founder and CEO of Employment Hero, said: “The SME Index this month shows stagnating growth for the Science, Information and Communication Technology sector. While the growth data is telling, it is not a huge cause for concern. Following a period of unsustainable growth marked by sky-high valuations and salaries, it appears the industry is undergoing a correction.”

According to the Government’s Employment White Paper on Jobs and Opportunities, projections produced by Victoria University for Jobs and Skills Australia show that digital and technology jobs will grow by 21 per cent by 2033. Moreover, the proof is in the pudding regarding the value of technology for Australia’s economy: According to the White paper, ‘between 2015 and 2017, small businesses that accelerated technology adoption grew revenue by 3.5 percentage points and employment by 5.2 percentage points per year faster than other small businesses.’

While the employment white paper outlines a shared vision for a labour market that is well-prepared for the future, Mr. Thompson argues that Australia does not have to start from scratch to move in the right direction.

“If the Government is genuinely committed to digital transformation and fostering collaboration across industries to stimulate economic growth, then it’s time for us to engage in a meaningful discussion. The National Skills Passport, which the government is exploring, has the potential to simplify how employees present their skills and qualifications to prospective employers. This includes utilising micro-credentials, digital badges, portfolios, resumes, and references, ultimately streamlining the hiring process for employers.

“Why would the Federal Government spend $9m of taxpayer dollars to evaluate if a skills passport is worthwhile when there are already multiple examples of equivalent products working at scale provided by the private sector? For example Swag by Employment Hero and Certsy by SEEK. This is a great opportunity for the Federal Government to partner with the private sector, which is years ahead, rather than compete with existing solutions. There’s no need for the Government to reinvent the wheel,” Mr Thompson continued.

More widely, the Employment Hero SME Index signals consumer mood in Australia is becoming more austere. The average employee growth in the Retail, Hospitality and Tourism sector saw a -0.02 per cent monthly decline while median hours worked declined annually by -1.5 per cent. Under 18s and 18-24-year-olds had the least median hours worked (29.2 and 85.6, respectively) across all age groups, as both demographics also saw an annual decrease in median hours worked (-5.1 per cent and -0.3 per cent, respectively).

Mr Thompson commented: “Discretionary spending is going down in the industries that bring us the most joy as Australians. The jump in the cost of living means everyday workers and families are spending less, and the SME Index indicates this is hitting our younger workforce the hardest. As we enter the Christmas and Holiday season, it will be telling to see if there is an uptick in seasonality hiring or if the current declines continue through this period as businesses seek to recoup losses.”

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