WARRNAMBOOL’S economy is “patchy” with retail businesses hit by online shopping and declining consumer confidence due to the dire economic situation in Europe, according to Commerce Warrnambool president Richard Montgomery.
Mr Montgomery said Warrnambool’s economy reflected the national scene with some sectors struggling and others strong.
“Retail has concerns about the next 12 months,” he said.
“These are difficult times.
“Small business is suffering.”
Mr Montgomery was commenting on the latest survey of business sentiment by the Victorian Employers’ Chamber of Commerce and Industry (VECCI) that showed business confidence in the state was under pressure.
The survey showed 61 per cent of respondents expected weaker economic conditions in Victoria in the year ahead.
Mr Montgomery said local businesses facing tough times should use the challenge as an opportunity to reinvigorate their marketing plans.
Next month’s Business Festival in Warrnambool was an ideal opportunity where businesses could get help to “rethink the way they did business”, he said.
Warrnambool City Council, Moyne Shire Council and Commerce Warrnambool have partnered with local businesses, training and media organisations to present a full program of business events and leading industry speakers for the festival.
Mr Montgomery said businesses in difficulty needed to “get out and talk to other businesses, create business links and form some new ideas”.
Getting caught up in doom and gloom would not be helpful, he said. Mr Montgomery said shopper habits had changed permanently since the Global Financial Crisis (GFC) to include more online spending.
While real household income had improved slightly since the GFC, the trend to online shopping had not changed.
Mr Montgomery said anxiety about the European financial situation was also affecting consumer confidence.
“A large degree of household savings is going to debt reduction and general savings in the bank. “When you take that cash flow out of the economy, combined with the leakage of online spending, you have a big impact.”
VECCI chief executive Mark Stone said the VECCI-Commonwealth Bank survey of business trends and prospects for the June quarter showed weaker national business conditions with falls in sales volumes and selling prices, a decline in profitability and a reduction in investment, both in buildings and structures, and plant and equipment.
Victoria’s performance during the June quarter was also lacklustre, with only 15 per cent of respondents reporting an improvement in general business conditions compared with 38 per cent reporting a decline.