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Businesses festive despite slower Christmas trading

December 06, 2011

More small businesses are planning to put on a Christmas bash and ramp up marketing activities this year, despite expecting generally quieter Christmas trading conditions.

According to the Sensis® Business Index released today, trading conditions have improved for Australian small businesses, but remain historically weak.

Report author Ms Christena Singh said small businesses had experienced improvements in business confidence, perceptions of the economy, sales and profitability during the quarter.

“We have seen a reversal of the sharp declines experienced last quarter. However, these improvements are coming from a low base, particularly profitability which was at a record low last quarter.

“While small businesses are expecting conditions to improve further this coming quarter, Christmas trading is expected to be down on last year,” she explained.

Overall, 26 per cent of businesses are expecting trading conditions to be busier this Christmas, while 31 per cent are expecting conditions to be quieter and the remainder are expecting it to be line ball with last year.

For those expecting an upswing in trading, an average increase of 20 per cent is predicted. Businesses anticipating a downturn in trading are expecting conditions to be 24 per cent slower than last year.

The Sensis® Business Index indicates 58 per cent of small businesses are planning to hold a Christmas party for staff, clients or suppliers this year, up from 52 per cent last year.

“Small businesses are also taking a slightly more proactive approach to managing the Christmas period this year, particular in relation to increasing advertising activities.

“For some businesses, for example in the accommodation, café and restaurant sector, it is about gearing the business up for a traditionally busy period of the year. For other businesses, for example in the finance and insurance sector, it is about managing the business through one of the quietest periods of the year,” she explained.

Overall, 21 per cent of small businesses are planning activities to manage the Christmas period, up one percentage point on last year.

Increasing advertising is the most popular activity planned, up from 24 per cent last year to 27 per cent this year. Other activities include introducing sales promotions (15 per cent), increasing staff (eight per cent), adjusting stock levels (eight per cent), extending trading hours (seven per cent) and changing advertising (seven per cent).

Key Indicators for December 2011 Sensis® Business Index: