Retailers fear staff cuts and closures amid cost of living crisis
With cost of living pressures hitting hard, small retail businesses are facing a grim future. The Saturday Telegraph talks to small retailers to see how they’re keeping their doors open.
NSW
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Every morning Ali Dibley unlocks the door to her vintage dress hire shop hoping “today will be different” — but her Marrickville store continues to echo with silence.
What was supposed to be a helping hand to the community — allowing brides, wedding guests and future prom queens to hire clothes at a fraction of the cost — has instead left her despairing, as she spends days on end waiting for customers to walk through the door.
“It’s been a quiet, slow year for the shop which has felt really hard at times,” Ms Dibley said. “Everyone tells you they love the business, and they love what you’ve been doing — that’s all very encouraging, but then you go home and haven’t made any money and that’s really tough.
“I have one staff member and I’ve had to reduce her hours, but I always kind of say it’s just for a while and when things pick up we’ll add it back on — except it just hasn’t picked up.”
Ms Dibley’s situation is not isolated, as the state’s retail sector struggles amid a cost of living crisis which is seeing many tightening the purse strings.
One in five NSW businesses (21 per cent) intend to cut staff in the next three months, according to exclusive data obtained by the Sunday Telegraph — up from 15 per cent in January.
But the situation is much worse when it comes to retail, with almost a third of retail businesses looking to cut staff, according to the May survey of business owners.
Retail turnover fell 0.4 per cent in March across Australia according to ABS figures, with the results being especially grim for NSW, where retail turnover fell 1.1 per cent – the biggest decline across all states and territories.
Daniel Hunter, Business NSW CEO, said it was vital for the upcoming state budget to bolster consumer and business confidence, following “slim pickings” provided by the federal budget.
“There is no doubt that NSW’s small and medium enterprises are under serious strain,” Mr Hunter said.
“Against headwinds of deteriorating business confidence, rising costs of energy and insurance and the short supply of housing, it is important that this budget continues to build NSW as the best state to start a business in, move a business to, or expand a business in.”
The Sunday Telegraph this week spoke to more than 20 retailers around Sydney and there was a common theme – it’s getting more expensive to run a business.
Domenico Ruggeri runs Dom Panino sandwich shop in Leichhardt with his wife Sara, but the last six months have been incredibly tough with the cost of goods going up.
“It’s very difficult to pass on the costs to the customer, because you’re in a catch-22,” Mr Ruggeri said.
“If you are more expensive you have less people coming through the door, so you’ve sort of got to stomach that and just hope that your consistency and your quality comes through, which is what we always try to do.”
KPMG national retail and consumer lead James Stewart said the future is looking to be positive, but it might take up to September next year for the retail sector to recover and return to a healthy level.
“Retailers who are selling household goods and some other discretionary retailers are probably hurting a little more than other categories right now,” Mr Stewart said.
“Despite the difficult times right now I am glass half full about where we’re going to get to, I just think it’s going to take a little while and we’re probably not going to see a bounce in consumer spending until maybe mid next year,” he said.
For the Marrickville dress rental store this is promising, though with the shop’s lease coming to an end late next year, Ms Dibley is not left with much wiggle room.
“As much as I want to keep going, it just doesn’t make sense to sign a new lease when I’m still struggling to make the rent,” Ms Dibley said.
“The thought of actually going through that process of shutting up shop and moving out and selling all the stock is pretty devastating – I wouldn’t even know where to start and I don’t really know what else I would do.
“We need to keep our weird little shops around and I’m not just talking about mine.
“Small businesses are what makes Sydney an interesting and vibrant place to live … we’d lose that if people stopped supporting their small local businesses.”
Govinda Paudel’s restaurant Mul Chowk Kitchen in Campsie used to be booming but he now has doubts he will be around in the next 10 years.
“People’s spending capacity is getting low and we have way less customers coming in than before,” Mr Paudel said.
“Because of too much competition, we can’t raise our prices significantly … but our profit margin is now not very good compared to what I started with in 2017.”
“If it continues like that in the next 10 years, I’ll have to back off.”
Fred Ramos, owner of Arthur Street Cafe in Baulkham Hills said: “The cafes that are surviving are the ones that are doing cheaper options, while the ones that have sit-down dining like I do are struggling”.
Jessica Barr from the Blowdry Boutique in Mosman said blow dries are becoming increasingly popular due to their low cost: “With hair colour people are going for more low-maintenance colours, something that they won’t have to do as often.”
Business has been going good for Trang Ho at of Bling Em Claws in Fairfield, as people increasingly look for high quality nail procedures, with only a few clients choosing to stretch out their next appointment time to save money.
Belmonte Italian
Tanya Stafa has been holding back from raising prices at Belmonte Italian Cuisine in Baulkham Hills, placing her customers first, but putting a dent in her profit margin.
“I’ve had to shop around and look at catalogues, checking out what’s on sale and chasing specials – you’re just constantly worried about the price of things,” Ms Stafa said.
Watch Your Fingers French Pâtisserie
Nigel and Marion Jeffery have noticed regulars not coming in as often to Watch Your Fingers French Pâtisserie in Constitution Hill.
“It’s really hard and you try to absorb the costs as much as you can, but we have had to put prices up.”
Nonie’s Floristry
The wedding flower business has been resilient for mother-daughter duo Nonie and Hamna Baloch in Rhodes, but some changes haven't gone unnoticed.
“There has been a growing interest in incorporating silk flower arrangements alongside fresh flowers, as they tend to be more budget-friendly than fresh flowers,” she said.
Lalka Boutique
Lalka Boutique was started by Eva Kucharzewski in 2012 and in recent months she described the business as a “ghost town”.
“Last month was a disaster … we’re 17 per cent down from last year,” Ms Kucharzewski said. “We have to continue to work hard, but it’s getting harder and harder.”
Cosimo Jewellery
Master jeweller Cosimo Mirarchi’s business has been steadily growing in Five Dock, but he has noticed a bigger interest in lab-grown diamonds.
“People that don’t have the budget for an earth-grown diamond go towards a lab-grown, which is more affordable and it looks pretty much exactly the same.”
Flowers by Jody
Jody McCure continues to provide floristry services in Blacktown, but over the past year customers have been watching every dollar, mainly buying flowers from Flowers by Jody for special occasions.
“People don’t have much spare money in our area, so I try and absorb the price rises as much as I can.”
Beauty Hub Sydney
Sheryl Perez has recently had to juggle several hats to save money, deciding to manage marketing and handle in-house tasks herself at the Beauty Hub in Moore Park.
“Recently, business has been noticeably quieter, with a significant decline in consumer spending as clients increasingly prioritise essential expenses over discretionary ones,” Ms Perez said.
“Customers are increasingly cautious.”
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