Cost of living crunch causes a slow start for retail spending

Interim CEO Lindsay Carroll

Measures contained in the recent Federal Budget, although generous in some areas, reflects a significant disconnect with the challenges small retailers are currently facing. The $41.7 million over four years for supporting small businesses is a positive step but falls short of addressing the broader issues plaguing the retail sector.

A primary concern is the neglect of rising insurance premiums. Retailers, especially those in areas prone to disruption, are grappling with skyrocketing insurance costs that threaten their survival. As the overall cost of goods and services increases, insurance providers must adjust their pricing to account for higher expenses associated with claims and coverage. And while many businesses are considering reducing their insurance coverage, it hinders their ability to recover from future damages.

Governments need to understand that high insurance premiums not only squeeze profit margins but also deter new entrants from starting retail businesses, stifling industry growth and innovation.

On a more positive note, retailers welcomed the Government’s extension of instant asset write-offs for assets under $20,000. However, the write-offs haven’t increased despite high inflation having increased the costs of such assets. Retailers need to invest in technology and infrastructure to stay competitive, but the current value on asset write-offs does not reflect the reality of rising costs, making it harder for small retailers to invest in necessary upgrades.

For example, many businesses facing a crime epidemic lack the funds to invest in cybersecurity. Retailers have increasingly become targets of cyber-attacks and shoplifting, both of which have severe financial and safety implications. We need robust cybersecurity measures and crime prevention strategies from the Government or small retailers remain vulnerable.

Moreover, the reduction in investment for vocational training in frontline retail roles is a short-sighted move. Retailers have been vocal about the need for continued investment in training to enhance employee skills and improve service quality. The decision to cut back on training funds ignores the importance of a skilled workforce in driving the backbone of our economy. A well-trained workforce is essential for the sustainability of Australia’s ever-evolving retail precincts. Often overlooked, they are the workers we encounter in the everyday interaction we take for granted.

In conclusion, while the government’s budget does include some supportive measures for small businesses, it lacks a comprehensive approach to tackle the pressing issues facing retailers. Rising insurance premiums, inadequate asset write-offs, insufficient cybersecurity investment, and reduced vocational training support are significant gaps reflecting a misunderstanding of the retail sector’s current challenges. Retailers need more targeted and substantial support to navigate these turbulent times and thrive in an increasingly competitive and complex market environment.