Small, medium traders fear WA’s success in combating spread of coronavirus not enough to save them

The West Australian,
Andy Montgomery and Paul FitzRoy at Urban Records in Leederville.
Andy Montgomery and Paul FitzRoy at Urban Records in Leederville. Credit: Iain Gillespie/The West Australian

One in 10 small and medium-sized enterprises in Perth are worried they won’t survive the next 12 months, with many traders not out of the woods despite WA’s success in containing COVID-19.

A report by marketing company Sensis released today revealed 12 per cent of Perth SMEs feared permanent closure in the next year, ahead of the national average of 8 per cent.

That is despite one in five (20 per cent) Perth SMEs reporting they had not been affected by the coronavirus pandemic.

Marketing expert Barry Urquhart said COVID-19 had accelerated some of the problems businesses were facing, suggesting there were significant issues at play prior to the pandemic such as cash flow.

Leederville novelty and record store Urban Depot has recovered significantly in June and July from a devastating blow to sales in April, according to co-founder Paul FitzRoy.

“April was horrific. We were down about 60 per cent and started to worry if we could keep the doors open,” Mr FitzRoy said.

Mr FitzRoy and his business partner Andy Montgomery decided to adjust what stock they were ordering and attempt to bring in merchandise that had proven to be popular while lockdowns were in effect.

“Initially we noticed that records, turntables and speakers were really popular and selling well, while women’s fashion dropped off,” Mr FitzRoy said.

Barry Urquhart
Barry Urquhart

Urban Depot increased the number of books it stocked to meet demand, and widened its variety of jigsaw puzzles and journals.

In July, the store’s revenue returned to be consistent with the same period last year, Mr FitzRoy said.

But Perth businesses on the whole are not overly optimistic about the future of the economy.

The Sensis survey showed 60 per cent of respondents said they believed conditions would be worse in 12 months time.

The WA Chamber of Commerce and Industry’s latest business confidence report told a similar story, with two out of three businesses expecting the economy to worsen over the next year.

Mr FitzRoy said the primary concern his store would face moving forward was significant disruptions to supply chains.

“I’ve already had calls from suppliers saying we need to put our Christmas orders in now, and if we wait we would likely miss out,” he said.

He said it was hard to gauge exactly how much inventory was needed for the holiday period and it could be hard to predict what items would be popular several months down the track.

April was horrific. We were down about 60 per cent and started to worry if we could keep the doors open. Urban Depot’s Paul FitzRoy

Additionally, fronting the cost of stock so early on comes with a financial risk.

Mr Urquhart said it was crucial for WA businesses to implement a model that equipped them to be competitive and sustainable in the long-term.

He stressed that simply surviving and holding out for life after COVID-19 was not practical as the market had changed during the pandemic.

Mr Urquhart suggested businesses had to continue to adapt to the current market, and prepare for future changes, if they wanted to thrive.

“Implementing a short and local supply chain is one of the best ways for a business to be resilient, competitive and sustainable,” Mr Urquhart said.

According to the CCIWA business confidence report, which assessed the June 2020 quarter, weak demand was nominated as the biggest barrier hindering the growth of a business.

In addition, 60 per cent of respondents said business was suffering due to interstate border restrictions.