Low consumer confidence in Adelaide – small business closing

Low consumer confidence in Adelaide – small business closing

Low consumer confidence in Adelaide – small business closing

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Low consumer confidence in Adelaide – small business closing


Low consumer confidence in Adelaide at the moment is a sign of bigger problems to come as we approach Holden’s closure in 2017. I have seen two main signs that it is about to hit the fan in Adelaide in 2017 and 2018 and it is a worry. One sign is consumers being attacked by anything and everything that wants their money. The other sign is that consumers are not shopping in small shops which are closing at what appears to be record rates. Here is a look at these two main signs of what is happening.

Low consumer confidence

Among the main drivers of lower consumer confidence that I see is job uncertainty, low wage growth, increasing credit card debt, and higher property values. Full-time jobs have been converted to part-time jobs more and more this year (ABS figures show this). That stifles wage growth which has been low this year. Business confidence is too low for investment in expansion projects. That means additional staff are not being hired. Then there is the combined effect of the credit and housing price problem.

When property values keep going up, the media thinks that it is great but householders do not. This is due to increasing bills based in part on the value of a property. This is a form of fraud because a rich man does not use that much more water than a poor man (except in the swimming pool and to wash twelve Aston Martins). Interest rates might be very low but property prices are far too high and therefore housing affordability is very low.

So people have huge mortgages and when the big bills roll in they use their credit card to pay some of them. This is why Australians are in record credit card debt. It does not help that credit card interest rates are still excessively high at the moment. Bad debts are rising so the banks have tightened lending criteria. Combine all of that and you can see a perfect storm of what is coming. It has already led to less spending in the smaller shops this year.

Small businesses closing

Dozens of big retail chains have closed this year with Payless Shoes being the latest. However, more and more small businesses are hitting the wall as customers avoid them. I have noticed lately that more and more small businesses have closed right before Christmas. Many of these were family run and were around for years. Customers have ignored these small fry in the business world and bigger competition nearby has shut them down.

Excessive rents, electricity, and taxes are often at the top of the list for why these businesses close. But I have noticed that customers just were not buying or even looking in some places that I have walked past and even shopped in myself.

We have seen some recent stories about clothing businesses closing. I have seen other small clothing retailers and also greengrocers and bakeries close and so on. Some of these were run by immigrant families. It is a shame and right before Christmas too.

The consolidation continues and I also blame massive underemployment. People cannot afford some of this stuff and some people have even said so in their comments on news stories this year. I have also heard that market stallholders have not done well lately, either, for another example.

People told me earlier in the year on my Facebook page that they could not afford the Fringe. There was too much on and they were trying to pay down Christmas debt and send the kids back to school after that annual cash grab by retailers. I fully expect to see the same comments in a couple of months. It is also another indication of low consumer confidence in Adelaide.

Something needs to break!

Related:

Adelaide small business retailers, consumers hard times, 02/04/2016



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