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Small Businesses Market Share Dropped

I am sure that you have heard that small businesses are the backbone of our economy; and it’s true.  Australia’s small businesses are being placed under increasing pressure as a result of deteriorating global economic conditions and a continued lack of funding.

Over the past four years, small businesses market share dropped from 39.5 per cent to 36.5 per cent in the $252 billion industry, according to a report from Morgan Stanley equities research.

“The weak retail environment is having a disproportionately large impact on smaller retailers,” said Morgan Stanley Australia equities analyst Thomas Kierath.

Looking at retail downturn during the late 1990s showed that larger grocery and food and clothing companies took “considerable” Small business market share dropmarket share from smaller players – “and this share doesn’t come back,” the report said.

The advantage larger players such as Woolworths, Coles, Myer and David Jones have suggests they would emerge from the current retail slump in “far stronger market positions,’’ helped by lower costs and better distribution networks.

Retail sales rose 1 per cent in June, quicker than a revised 0.8 per cent rise for May, according to the Australia Bureau of Statistics but remain at subdued level compared with longer term growth trends. However, the jump was the biggest two-month gain since $19 billion of stimulus payments were delivered between December 2008 and April 2009.

The report found that large food retailers held about 75 per cent of market share in March 2008, which has since risen to 79 per cent. Over the same time, the market share of smaller grocers moved from 25 per cent to 21 per cent.

“In the clothing and accessories market, smaller retailers have lost about 9 percentage points in market share to large retailers since March 2008,” the report said. The gain is driven by large retailers’ ability to directly source large volumes of goods and the capability to distribute private label brands, the report said.  “Smaller retailers don’t have the size or distribution platforms that enable this.”

Big Business Leaving Small Business Struggling

Recently the Minister for Innovation acknowledged that the domination of Coles and Woolworths is having a negative impact on innovation, it is about time that someone opened their eyes and figured out that good policy isn’t about protection of small business but freeing up of choice and opportunity.

These companies have created local retail monopolies that force innovative small businesses out of the market.

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