Australian consumers are favouring larger companies over small businesses for their groceries, and the trend is gaining ground fast.
It's an alarming fact for 'mom and pop' stores, as just 29 per cent of consumers claim to have increased their shopping frequency with small businesses in the past year, compared to 37 per cent in 2016.
This was a key finding in a report published by American Express in the lead-up to its annual Shop Small campaign.
The finance company also found that 45 per cent of the SMEs interviewed believed they were at a moderate or significant risk of insolvency in the next five years.
The Shop Small campaign aims to inspire support for small businesses during the month of November.
American Express Card Members registered with the Shop Small promotion will receive $10 credit for every $20 they spend in participating businesses, up to a total of $50.
Despite the lowered foot traffic in small stores, American Express says the outlook is positive, with 43 per cent of small businesses reporting increased turnover in the past year, and 41 per cent holding steady.
“This is good news for more than just the small business sector as almost half of what we spend in small businesses is invested back into local economies,” Katrina Konstas, American Express’ vice president for small merchants, said.
“What goes around comes around. Independent businesses have long been recognised as a source of employment and neighbourhood character, but the multiplier effect of choosing to spend money at small businesses is less well known.
The ‘Boomerang Dollar’ effect shows that almost $38 billion is reinvested into our communities every year through local spending, and two thirds of consumers would choose a small business or recommend it to others if it supported other local businesses.
