In its Small Business Now: Holiday Crunch report, it found that in response to inflation, 60% of ANZ consumers are reducing spending at SMBs—the highest of any region polled.

According to the report, 43% of ANZ SMBs have had to increase costs to combat inflation—slightly below the global average (44%).

“Small businesses make up almost 98% of businesses in Australia and New Zealand, and supporting them right now will genuinely help some of these businesses survive the economic storm,” said Constant Contact vice president Renee Chaplin.

“Big businesses have the economy of scale to weather inflation and decrease costs in the face of competition. But small businesses are rarely in this position and instead need to find ways to stay top of mind and connect with the community to keep them coming back.”

ANZ SMBs less reliant on end-of-year spending than other regions

Unlike the US, Canada, the UK, ANZ SMBs are less reliant on spending over the Christmas and New Year period to boost spending.

US businesses are significantly more dependent on Q4 (Oct-Dec) and, therefore, feel the most pressure to drive revenue during this time than other regions.

However, in ANZ SMBs report to have the most evenly distributed dependency throughout the year, with just 29% feeling the most pressure to drive revenue during this period (Q4)—the lowest among polled regions.

ANZ businesses report a fairly even distribution in pressure throughout the year, with 23% in Q1 (Jan-Mar), 25 % in Q2 (Apr-Jun), and 23 % in Q3 (Jul-Sep).

“It’s reassuring to see that the Christmas and New Year period isn’t ‘make or break’ pressure for small business as is the case in other regions,” said Chaplin.

“Although, it’s clear that SMBs are missing an opportunity to further drive revenue in what is typically the busiest spending season of the year for many industries – particularly at a time when, regardless of inflation, people are looking to spend more than usual.”

“It comes down to marketing and being prepared in areas like labour and training for staff. SMBs in Australia and New Zealand seem to be lagging behind their global counterparts.”

Small Business Association of Australia CEO and founder Anne Nalder believes this can be attributed to the culture in Australia and New Zealand.

“The ‘she’ll be right’ mentality in this region is a part of who we all are, but it doesn’t bode well when it comes down to a small business owner assessing how their business is going, and whether they’ll be able to survive some of the hardest times we’ve seen for businesses in this country in thirty years,” said Nalder.

“Small businesses do need to be taking opportunities to educate themselves, train their staff and promote their business. Communication is essential to being competitive, and many small businesses don’t prioritise it enough.”

ANZ region slowest to think about Christmas/New Year period spending and marketing
The report found that ANZ consumers begin to plan on spending over the Christmas and New Year period at the last minute.

The report found that 72% of ANZ consumers typically only start thinking about end-of-year spending from October onwards, with 26% beginning their end-of-year spending plans in October, 28% in November and 18 % in December – the latter of which is the highest among polled regions.

“The opportunity is there for SMBs to drive revenue at a time when local customers are looking to spend in what, comparatively to the world, is a relative flurry,” said Chaplin. “But much like their customers, ANZ SMBs are leaving things to the last minute when it comes to marketing and promotion.”

SMBs in the ANZ region tend to start marketing for this busy end-of-year rush later than in other regions, according to those surveyed.

In fact, nearly half (48 %) of ANZ SMBs surveyed wait until Q4 (18% in Oct, 20% in Nov and 10% in Dec) to start preparing their marketing for the peak spending period of Christmas and New Year. By way of comparison, just 40% of SMBs in the US, 31% in the UK, and 41% in Canada start marketing preparations as late in the year.

“When customers do have money to spend, SMBs need to have those customers thinking of them first,” said Chaplin.

“Now granted, ANZ consumers typically start to think about holiday shopping later than other regions, but that’s no reason to wait. In tight economic times, being first to market and working hard to be top-of-mind is not only smart, it’s good business practice.

“A focus on customer service should also be a priority for small businesses in the lead up to peak spending periods, which can often be an afterthought,” said Nalder. “This stems from the owner level down, and it can really impact a business if they don’t get this right — so it’s important to make the time and invest in training of employees.”

Lack of marketing budget amid inflationary environment
In some cases, the reason for a lack of marketing may come down to financial constraints and budgets, particularly amid an inflationary environment.

Budget limitations were cited by 38% of ANZ businesses as the biggest barrier to marketing ahead of and during the Christmas and New Year period – slightly above the global average of 37%.

“Inflation is clearly having an impact on small business owners who are looking to reduce expenses by trimming the fat where they can,” said Nalder.

“It’s important for marketing to continue; this isn’t the time to go into a holding pattern. Embracing new technology to fill gaps in knowledge, or to do the work an owner doesn't have time to do, can really help companies stay top of mind and compete against the corporations with more people and bigger budgets.”

Research conducted last year revealed that less than half (49%) of shoppers at a small business receive an email after making a purchase, and 27% never hear from the business again.

“To survive in tough economic times, particularly when competing against big business who have the economies of scale to discount heavily, SMBs must stay top of mind and communication and marketing is essential to that,” said Chaplin.

To learn more about the findings from Constant Contact's Small Business Now report, download the report.