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Australian small food retailers face fiercest competition

Of all small retailers in Australia, competition is toughest for businesses selling food and groceries, new research from Roy Morgan Research revealed.

The study showed that more than half (55 percent) of small food retailers such as grocers and convenience stores reported that competition affected business performance in the last 12 months. This is 23 percentage points higher than for small businesses across all industries, and 12 percentage points higher than the average for small retail businesses.

The study defined small businesses are those with fewer than 20 employees.

More than one in two small hardware and gardening (53 percent) and electronics (52 percent) retailers also rate competition as a determining factor on overall business performance, whereas competition is less fierce among small clothing and footwear (42 percent) and furniture (37 percent) retailers.

Nevertheless, despite high levels of competition 45 percent of small food retailers have a confident outlook for 2013 and expect overall business performance will improve.

Nigel Smith, Director of Business Research, Roy Morgan Research, said that the renewed interest of the Australian Competition and Consumer Commission (ACCC) renewed interest in the competitive environment for food retailing is timely, as many small retailers—particularly food retailers—are facing difficult conditions in 2013.

“Competition only benefits consumers when it’s maintained in the long term. Predatory pricing by larger retailers—and increased take-up by price-conscious consumers—may lead to fewer competitors, an ultimately detrimental situation for both consumers and the retail industry,” he said.