Australian SMEs are set to benefit from customers demanding more than just a place to shop, with around three quarters (73 per cent) of shoppers actively seeking out businesses that offer sustainable products and services.
The study conducted by American Express in partnership with Oxford Economics, found that many SMEs are capitalising on this market opportunity, with 86 per cent considering sustainable and ethical business practices to be a key driver of growth and profitability.
The study also indicated that this customer demand will only intensify, with 76 per cent of SMEs believing there is a growing market opportunity for providing ethical, transparent and locally sourced products.
Martin Seward, Vice President of American Express Global Commercial Services said, “With Australian shoppers increasingly basing spending decisions on how ethical they perceive a business to be, and the impact that business has on the environment and society in general, sustainable business practices are no longer a nice to have, they’re essential for any size of business competing today.”
“Our survey revealed that around two thirds of SMEs (68 per cent) are concerned about intensifying competition from larger companies, so many are looking for ways to differentiate themselves and find a competitive edge.”
Michelle Grand-Milkovic, owner of love.fish, a Sydney based restaurant located in the heart of Darling Harbour, has seen first-hand the success that can come from building a thriving business based on a responsible approach. She said, “From the outset, our philosophy has been simple – to serve great food and support a more sustainable future. We offer the best possible seafood from ethical and sustainable sources and strive to lighten our footprint through green initiatives such as our recent move to Barangaroo’s 6 Star Green Star-rated precinct. Maintaining integrity has created a loyal customer base for us, which is key to success in this fickle industry. It’s important to be different and to understand that being socially and environmentally sustainable creates value in your business.”
The ability to respond rapidly to changing customer preferences is recognised as a key growth strategy in the American Express research, yet in practice this remains a challenge for many SMEs. Less than half surveyed (46 per cent) believe they are able to quickly respond to changing shopper demands and only half (52 per cent) feel they are effective at innovating their product or service offering.
Australian SMEs say that fostering an innovative culture and employing talented innovators will be the most important factors when it comes to improving innovation in their business. Looking ahead over the next three years, local businesses are acting ahead of their global counterparts to intensify innovation efforts through increased staff engagement and development. In particular:
- Encouraging all staff to contribute to ideas (57 per cent locally vs 53 per cent globally);
- Allocating time for idea generation (64 per cent locally vs 57 per cent globally); and
- Encouraging an innovative culture (75 per cent locally vs 68 per cent globally).
This article was originally published on Inside Small Business on 6 July 2018.