Suburbs key to Australia’s economic recovery

Mac Wang, Head of Australia and New Zealand at Stripe Source: Supplied

The business landscape within Australian suburbs is typically limited to corner stores, newsagents and cafes — unlike the fast-paced, often hectic CBD areas that we might more commonly think about as the centre of a nation’s business activity. However, COVID has changed that by decentralising the economy away from CBDs. With office workers no longer heading into the city, the pandemic has made suburbs the hot-bed of business activity. Outer suburban areas were much less affected compared to metropolitan areas. Sydney’s CBD experienced a decline of 33 per cent in retail and recreational spending during October- November. During the same time period, suburban areas like Campbelltown, Camden and the Blue Mountains experienced increases of 12, 15 and 13 per cent, respectively across the same categories.

Habitual localisation

Now more than ever, people are relying on all of the amenities their local areas have to offer. From postal services, independent grocery stores, boutique outlets and neighbourhood cafes, people have gotten used to their suburbs from being stuck in them during lockdown. We’re much more acquainted with our surroundings at home because of how much time we’ve spent, and are now opting to spend in the area. A recent study from Kantar found that almost 7 in 10 people believe shopping local is important to help the economy, and even after the pandemic – 29 per cent will continue to purchase products produced and sold by retailers near them. This also presents a key opportunity for local retailers, who can gain a competitive edge by truly understanding their customer base; not just their shopping habits, but also their likes and dislikes. Never underestimate the value of over-the-counter conversation, and the types of insights you can glean from this type of interaction. Ultimately, people are comfortable spending money in the suburbs, because it’s now familiar – we are after all, creatures of habit.

The online investment

Traditionally, regional businesses haven’t had an e-commerce focus. COVID-19 has been a forcing function of this, and for a lot of these businesses – moving online was an investment. It was uncharted territory and meant businesses needed to acquire customers in a way they weren’t familiar with. Online shopping now accounts for 11.5 per cent of total retail sales in Australia – turning foot traffic into web traffic, diminishing the densely populated CBD areas, and shifting the attention – and more importantly the dollars – online and into more suburban and regional based areas. Businesses operating in these types of areas are rooted in tradition, old age and consistency. They have been notoriously slow to implement adaptability or agility into their business models, including broadening into the e-commerce space – so in a way, COVID-19 has been a driving force behind their digital migrations. In 2020, payments platform Stripe helped bring over 9,000 businesses from regional Australian towns like Geelong and Dubbo online, supporting them with their ‘digital transformation’, which has been key to growing these highly localised online economies.

Powering economic recovery

Who would have thought a few years back, that small businesses – some built out of their own backyards – would be powering the economic recovery. Businesses like WesEggs, based in Geelong Victoria, 123 Tix, based out in Dubbo NSW and Shop My Town from regional Queensland, are all selling online. During COVID-19, Stripe supported Shop My Town with its digital migration, and today, the small business is helping so many other small businesses ensure locals are buying local, and are able to do so online.

So, when we consider ‘economic recovery’ and what it means in the broader sense of the term, I urge society to think outside the box. COVID-19 has put businesses, big and small, on the digitalisation path. It’s fast tracked a transformation and enabled Australians to embrace the technological advances as advances. The success of suburbs was hinged on this – small businesses are powering the economic recovery, and they’re here to stay.