Boost Local Economies: Redirect $11 Billion to Small Businesses

Households in New Zealand spend over $110 billion annually with large retailers. Research from Xero, a global small business platform, indicates that redirecting just 10% of this spending to local businesses could inject $11 billion into the small business economy.

Xero’s analysis of last year’s household consumption data excluded expenditures unlikely to benefit small retailers, such as utility bills, transportation, and communication services. According to Bridget Snelling, country manager for Xero New Zealand, this shift in consumer behavior could significantly benefit both individual businesses and the broader small business sector, particularly during peak shopping seasons such as Black Friday and Christmas.

“We have the opportunity to make a real difference,” Snelling stated. “If we can move just 10% of that spending to focus on supporting small businesses, that’s $11 billion that can circulate in the economy and help sustain local enterprises rather than going offshore.”

Many consumers, according to Snelling, may not fully understand how their spending choices impact the economy. “People are not always conscious spenders and may not consider where they place their money,” she explained. “We need to support the businesses that represent 97% of all businesses in our country. As we approach Christmas and Black Friday sales, it’s crucial to encourage consumers to think about supporting local retailers.”

The past few years have been particularly challenging for small businesses, especially retailers, as they have grappled with the effects of the Covid-19 pandemic. Snelling described the visible struggles in communities, saying, “You can walk down any shopping strip and find empty shops, as rising lease costs and insufficient sales force many to close.”

According to Xero’s Small Business Insights for the September quarter, the small business sector experienced a 1.2% decline in job growth year-on-year, yet sales improved by 2.9% nationwide. This positive sales growth suggests the start of an economic recovery following four consecutive quarters of stagnation. “We’ve seen a slight increase in September,” Snelling noted. “If we can replicate that success in December, it indicates that things are beginning to improve.”

Russell Clements, director of Appliance Outlet in Auckland, emphasized the importance of supporting small retailers. He noted that many consumers mistakenly believe these businesses offer limited product ranges or less competitive pricing. “The larger retailers can afford to reduce prices during tough economic times, but small businesses are at risk of failing,” Clements said. “It’s important to think about where your money goes.”

His message is straightforward: “Support the little guys.” Clements pointed out that many of his competitors are Australian businesses, meaning a significant portion of consumer spending flows overseas. “Keeping it local helps the economy and allows us to pay our employees better, ensuring they keep their jobs. When we support local businesses, that money comes back to the economy.”

As the holiday shopping season approaches, the call to action is clear. By choosing to shop local, consumers can not only support their community but also contribute to a more resilient and thriving small business economy.