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Retailers increase advertising dollars to drive sales- September ARA Australian Retailers' Index released

New research released in the September Australian ARA Australian Retailers' Index reveals SME retailers are cutting back on costs but spending more on advertising in a bid to drive sales.

Australian Retailers Association (ARA) Executive Director Richard Evans said retail SMEs were more concerned about the current economic climate than any other sector and with sales falling they were adapting to the new conditions.

"With a drop in sales and profitability and increasing concern about the current economic climate, it's not surprising 30 percent of retailers indicate they have reduced their cost base in the past quarter.

"What's interesting is that the second most frequent response to the current economic climate was that retailers were advertising more, with 16 per cent of retailers reporting this strategy. This is five percent higher than was the case for SMEs in general.

"This is a positive indication that retailers are starting to understand you can't compete on price alone in times of economic uncertainty. Rather than focusing on making products cheaper, retailers are injecting dollars into advertising campaigns and thinking strategically about how they can give consumers, who have limited discretionary spend, a reason to shop. For small retailers though, advertising is not the only way to do this. Indeed, it may not be the most cost-effective way to communicate with customers," Evans said.

"The results also reveal a worrying 13 percent of retailers have not yet taken steps to adapt to the current economic climate, with five percent of retailers indicating they are planning to take action in the near future and eight percent saying they are doing nothing.

"Australian retailing is in a period of change and the current economic uncertainty is a great source of opportunity for retailers. To grow and prosper, retailers must be adaptable to the new conditions," Evans said.

The ARA Australian Retailers' Index analyses the Sensis® Business Index results for businesses in the retail sector, providing a snap shot of the retail sector every quarter in the following categories: retailer confidence; retailer concerns; sales, profitability and employment; capital expenditure; wages and prices and assessment of Federal Government policies. The results of the ARA Australian Retailers' Index assist the ARA to maintain strong links with government and influence and direct policy affecting the retail industry.

For over 104 years, the Australian Retailers Association (ARA) has been the peak industry body in Australia's $292 billion retail sector which employs over 1.2 million people. As an incorporated employer body under the Workplace Relations Act and with a range of member services including business consulting, policy development, advocacy and education, the ARA promotes and protects over 5000 independent and national retailers throughout Australia. Visit www.retail.org.au or call 1300 368 041.

For interview opportunities with ARA Executive Director Richard Evans contact:
Kath Christie, ARA Policy & Media T: 0422 293 544 E: kath.christie@retail.org.au

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