RETAIL, HOSPITALITY EXPECT A GOOD YEAR AHEAD
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14 December 2016 - With the festive season just around the corner, a new survey reveals retail and hospitality businesses are picking it will be a cracker year.
According to the latest MYOB Business Monitor, 47 percent of local businesses in these sectors report they are busier than normal for this time of year. This comes after an already good year, with 32 percent reporting an increase in revenue over the past 12 months.
It's good news for many intending franchise buyers, as cafe, quick service, fast food and restaurant franchises are among the most popular opportunities, and comes on top of another survey suggesting that most franchisees can look forward to increased profitability in the year ahead.
MYOB New Zealand Head of SME Ingrid Cronin-Knight says the retail and hospitality sectors are in good shape and she’s hearing positive sentiment from business customers.
‘These sectors continue to grow and have really established themselves as one of the leading lights in New Zealand’s economy. Optimism is crucial and there is confidence from within the sectors that the positive trends will continue well into the future.’
Forty-four percent of SMEs in the two sectors believe the economy will continue to improve over the next 12 months and just under half (49 percent) believe they will see further increases in revenue. This is ahead of the national average of 42 percent.
The retail and hospitality sectors lead when it comes to being digitally connected, with 86 percent having an online presence – well above the national average of 50 percent. 23 percent operate a website, while 17 percent use social media and 41 percent do both.
Ms Cronin-Knight says the strong use of online technology is an important factor for every business, with the ability to increase revenue, bolster customer engagement and also aid communication.
‘The retail and hospitality sector has always been good at using technology in such a way that it benefits business,’ she says. ‘It’s great to see businesses in these industries doing all they can to ramp up their online presence in the face of increasing competition.’
Cash flow is the greatest concern for operators in the retail and hospitality industries, with 30 percent reporting being under extreme pressure – up from 21 percent in June.
Other pain points include attracting and retaining customers (27 percent), tax compliance obligations (26 percent) and competitive activity (26 percent).
‘While many businesses are busier than usual, they are still concerned about cashflow. Many of them are operating with tight margins so people should get out this season and support our retailers, restaurants, cafés and bars,’ Ms Cronin-Knight says.
‘We’re also looking at pressure generated from greater competition and other flow-on effects of continued growth, which in themselves aren’t terrible problems to have, provided businesses feel supported and can plan based on good financial information.’
A third of the retail and hospitality sector plan to increase the amount they pay their employees within the next 12 months – well above the national average of 22 percent.
The number of businesses increasing their range of products and services on offer is also above average (42 percent, compared to the average of 24 percent) and 39 percent are looking to boost price margins.
Ms Cronin-Knight says not only is this good news for those working within the sector, but also for the broader economy.
‘These are some really positive signs of growth, which of course supports local jobs throughout New Zealand. The continued success of the retail and hospitality sector in New Zealand requires careful management and the fact the industry has continued to do so well is testament to the hard work the businesses are putting in now, and have continued to put in over time.’
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