Local eastern suburbs businesses innovate in fight for survival

The engine room of the economy has been dealt blow after blow recently. Find out how local eastern suburbs firms are rising to the ongoing challenges.

Covid was a low point for many, but especially for small businesses. We’re finally coming out of it but while lockdowns have ended, interest rates and cost-of-living pressures are rising.

For many, it feels like another blow just as things were starting to look up.

Lumiere Cafe has been serving the Surry Hills community for almost 20 years. Manager Eden Wong says staffing is an ongoing issue, but rising prices for power and produce have hit hard.

“We look at our costs every few weeks. At the moment we are absorbing them. We’ve made that decision as we think it’s only a bump in the road and we don’t like putting our prices up,” he says.

“We have had to be very careful with our spending, with the interest rates going up, Covid, inflation and flooding around Australia, which has impacted the cost of fruit and vegetables.”

Lumiere Cafe is involved with Eastside Sydney (a collaboration between Surry Hills, Potts Point and Darlinghurst businesses) which helps promote local businesses in the area, but Wong says government support is crucial.

Lumiere co-manager Gary Gorton. Picture: John Appleyard

“I think we need to fix the supply chain issues, as that’s what is driving prices up on some goods. The government can also help by reducing certain taxes like petrol, GST and payroll taxes. Local government can also put a freeze on, or reduce, fees,” he says.

“If small businesses – as the biggest sector of employment – close, there will be increased unemployment. Less spending equals less taxes.”

President of East Connect, an eastern suburbs-based SME business network group, Elaine Davies, says consumers are watching their pennies now but the real cost-of-living crisis will hit next year when those who locked in low interest rates during Covid switch to variable mortgage rates.

“I think in April/March we’re going to see a whole load of pain out there,” she says.

“In the last 10 years, all interest rates have done is gone backwards and it’s going to be a real shock to a lot of people who may well end up paying double on their mortgage.

“I think people are more conservative in their spending on the big financial things, such as holidays and second cars, but day-to-day they’re spending on little treats like lipstick and breakfast out. I think the day-to-day retail on the lower end is probably doing all right – when I walk around Maroubra the cafes are packed.”

Elaine Davies president of East Connect. Picture: Nikki Heist

Davies agrees staff and rising costs are a challenge, but says one of the biggest is rents.

“Landlords aren’t really bringing rents down. There are a lot of empty shopfronts – why not bring rent down to have secure tenants? How much money do they need?” she says.

“Getting a tax break from having an empty property is not conducive to creating a local community.”

Davies believes community is key in tough times.

“East Connect just did an event at the Coogee Wine Room; we introduced people and got them using each other’s businesses,” she says.

“We’re active in keeping the community together and supporting each other.”

Fashion accessories brand Arms Of Eve knows that in a tough retail market, it’s important to innovate. The brand started selling its wares at Bondi and Paddington markets before opening a retail store in Bondi at the end of lockdown.

Designer Kerryn Langer says the rising cost of living has affected spending and, in response, the business has diversified its revenue streams.

“We started as a direct-to-consumer brand, purposefully building an eCom business, but it’s valuable to test other revenue channels. We found that marketplaces like The Iconic and wholesale across Australia helped build our brand profile and ultimately drive more sales to our store,” she says.

Arms Of Eve jewellery designer Kerryn Langer. Picture: John Appleyard

One of the costs the business has had to absorb is the cost of shipping, thanks to rising oil prices.

“In such a competitive marketplace, we understood that shipping costs would ultimately have to be absorbed by the business or figured into the product’s price,” Langer says.

“We wanted to remove any obstacles for customers to purchase from us, making it as enjoyable a customer experience as possible.

“There is a place for shipping charges but it depends on the size/scale of the product.

“By design, our products are high value but small in terms of dimensions/weight, so we’d rather absorb these costs.”

Langer believes it’s essential to think outside the box to compete in this challenging environment.

“To deliver value and exclusivity to one of our largest wholesale customers, we collaborated with them to develop custom collections that only they have access to,” she says.

When it comes to the luxury service space, Tom Hair Studios owner Tom Cole believes there is still a solid market, it is just smaller than it was pre-Covid.

“There have definitely been challenges, however, with the majority of people working from home at least one day a week, clients have been able to work from the salon, allowing our business to grow during those periods of the day which would normally be trickier to fill,” he says.

Hairdresser Tom Cole. Photo: Simon Fitzpatrick

Like all businesses, there are hurdles.

“Inflation and rising costs are definitely a challenge as a reasonably new, small business (the salon opened in Double Bay about 18 months ago),” Cole says.

“We have been holding off a price increase as we have simply not been open long enough to warrant one, forcing the business to absorb these costs.

“The biggest challenge is getting the right talent. Every salon has struggled since Australia closed its borders.”

Everyone agrees that staffing is an issue.

The Bondi Chamber of Commerce would like to see funded RSA training for hospitality staff, a streamlined process for sponsoring skilled workers and incentives to bring tourists and backpackers to the area again. The last point is crucial, as backpackers made up a large portion of the employment market pre-pandemic.

“Wage costs are rising due to the tight labour market. There is still a lack of qualified staff in local businesses, but we have started to see some backpackers coming into the area,” the chamber says. “Current staffing issues are finding staff, encouraging staff to work full weeks, greater expectations of more flexible workplaces and expectations of higher wages than the award.”

Business Coogee president Lucy Bloom has a potential solution.

Lucy Bloom from Business Coogee. Photographer: Melinda Hird

“I would love to see financial incentives for business to offer family-friendly contracts – working 9.30am to 2.30pm, a week off every school holidays and the whole of January off. Like apprenticeship government support, give a $20,000 grant for every employee hired on a contract like this,” she says.

“This would benefit businesses by giving them access to an enormous labour pool – parents who can’t or don’t want to work 9-5 – at a time when labour shortages are a huge issue.

“We also know that a full-time 38-hour week is less productive than a shorter work week. The financial incentive would be incredible. Business Coogee has had conversations about this idea with politicians but this is in its infancy.”

Bloom believes another key factor for local businesses is better public transport.

“There is very limited parking in the east, so we need a world-class bus network connecting the world-class beaches,” she says.

“We have had our buses drastically reduced in Coogee with a preference for the light rail – but that is a 20-minute uphill walk from the beach and reduced buses to get there. We need more ways for people to find it easy to come here and get home again.”