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Headline = How small businesses can navigate the holiday season amid economic uncertainty
With the 2024 festive season around the corner, many Australian small businesses are facing several challenges, including cost of living pressures, high operating costs and changing consumer behaviour.
However, among the hurdles, the holiday period also offers opportunities.
Here are some key strategies and insights for small businesses looking to maximise this potentially critical season while managing economic uncertainties:
1. Early promotions and flexible pricing
In light of inflation, Australian consumers are increasingly cautious about their spending habits, with a recent survey by Constant Contact revealing that 60% of Australians – the highest proportion of consumers globally – have scaled back their spending at small businesses. This means that shoppers are likely to be on the lookout for early deals.
The Constant Contact report found that the top three things SMEs globally are doing to have a successful holiday season are improving their efficiency (35%), offering special promotions or discounts (28%) and creating an end-of-year marketing strategy (26%).
By offering early discounts or bundling products and services, though, businesses can capture customer attention before peak spending periods. This strategy not only helps to boost early-season revenue but also alleviates potential pressures on supply and demand that can arise closer to key holiday dates
2. Streamlined operations to manage rising costs
With operating costs elevated due to high energy, logistics and labour expenses, small businesses are focusing on streamlining operations to protect profit margins, according to the Reserve Bank of Australia (RBA).
Its October bulletin on ‘Small Business Economic and Financial Conditions’ notes that many small businesses are looking to implement cost-cutting measures over the next year, including:
- Increasing automation
- Cutting IT expenditure
- Investing in new manufacturing centres to reduce transport costs
They are also looking to cut costs by decreasing employment.
Cost-effective tactics like inventory management software, email marketing automation and efficient staffing practices can help keep costs under control. Investing in these resources can provide short-term relief by reducing the need for additional staff or cutting down on marketing expenses, both of which are particularly high during the holiday period.
3. More focus on customer retention
In uncertain economic times, fostering customer loyalty can be more valuable than acquiring new customers. Early in 2024, many small businesses reported using the holiday season to strengthen their relationships with existing customers through loyalty programs, personalised offers and high-touch customer service.
This holiday season, small businesses could offer special holiday deals exclusively for returning customers or implement a loyalty rewards system that provides incentives for repeat purchases. This approach aligns well with the economic climate as customers appreciate personalised experiences and added value during times when they are mindful of their spending.
Other holiday season strategies for SMEs
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Adoption of digital marketing
Digital marketing provides a cost-effective way to reach customers, and many small businesses are now expanding their online presence to capture more holiday sales. Social media platforms like Instagram, Facebook and TikTok offer ways to engage with customers through holiday-themed content, targeted ads and live shopping events.
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Alternative revenue streams
To mitigate the risks of slow foot traffic or reduced discretionary spending, some small businesses are diversifying their revenue sources. For example, many retailers are expanding into e-commerce, offering local delivery, or creating unique holiday experiences such as gift-wrapping services or customisable gift bundles.
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