As retailers and hospitality business operators grapple with one of the most complex trading weeks of the year, many are hopeful that rising consumer confidence will translate into strong sales for the next 12 months.
According to the latest MYOB Business Monitor Report, SME operators in the retail and hospitality sector are expecting a complete turnaround in performance over the year ahead. In the year to February 2014, retail and hospitality was the only sector to report revenue falls (33%) outweighing revenue gains (30%). However, for the year to February 2015, 50% of retail and hospitality businesses expect revenue to increase (compared to 47% of all SMEs).
MYOB New Zealand Business Division Sales Manager Scott Gardiner says the turnaround in the industry is great news for the whole economy.
“Retail and hospitality is a vital sector for the country. These businesses sit at the heart of most of our communities,” says Scott Gardiner. “They provide not only access to goods, services and entertainment for New Zealanders, they also create many job opportunities, especially for younger people.”
“To see a turnaround in this key sector, particularly after a challenging period, really underscores how strong the SME economy is looking for 2014.”
Lower confidence in economy, Government
Despite strong backing for their own performance, retail and hospitality SME operators are less confident in the wider economy. 42% believe the economy will improve within the next 12 months (compared to 50% of all SMEs), while 40% believe an improvement will take more than a year (36% all SMEs).
Operators in the sector are also less likely to express satisfaction with the support of the Government. Only 26% of retail and hospitality business operators say they are satisfied with the Government’s support, compared to 33% overall.
Investment strategies for 2014
“The good news for the many New Zealanders employed by the retail and hospitality sector is that wages growth is a key trend we are seeing in the latest Monitor, with 27% expecting to increase pay rates in the next year,” says Mr Gardiner.
“That cost is likely to be borne by consumers, however, as more than a third of businesses in the sector look to increase prices and margins.”
More job opportunities will be available in the sector, with 13% of retail and hospitality business operators intending to increase the number of full time employees in the year to February 2015. 22% expect to increase the number of part time or casual employees in their business.
The internet will also become a stronger focus for retailers and hospitality businesses, with 34% planning to increase online sales and 28% increasing their investment in marketing on the web.
Key pressures for the sector
“The competitive environment is a greater focus for retail and hospitality business operators, as many look to attract and retain more customers, while also managing cashflow,” says Scott Gardiner.
Key pressures for retail and hospitality business operators:
- Competitive activity (30%)
- Cashflow (26%)
- Attracting new customers (24%)
- Raising finance (23%)
- Meeting tax obligations / Customer retention (Equal 5th at 22% each)
Lack of credit card facilities losing customers
The Monitor also explored the payment options businesses use, with 60% of retail and hospitality businesses offering credit card facilities to their customers.
16% of SMEs reported they had lost customers because they didn’t provide the facilities. 21% of those that don’t offer credit card payments believed they would make more sales if they did offer them. Embracing cloud technologies, such as mobile credit payment facilities, provides enormous opportunity for these SMES to increase their revenue.