Business needs survey

Takeaways

Economic outlook

• The local economy grew by 3.5% in the 2023 financial year, outpacing the national growth rate of 2.1% and reaching 110% of its pre-pandemic level.
• Foot traffic in the city centre has increased to 70% of pre-pandemic levels from September to November and weekly average consumer spend is at 95% of pre-pandemic levels.
• The local economy, and in particular consumer-dependent businesses, have benefitted from a strong rebound in overseas migration as international students return to Sydney.
• Challenging macroeconomic conditions are influencing consumption and business sentiment. Interest rate and inflation pressures are partially offsetting some of these recent benefits to consumption, and impacting business confidence.

Impact on operations

• Half of all City of Sydney businesses surveyed are operating below pre-pandemic capacity.
• As the transition to hybrid working starts to stabilise, office-based businesses in the city continue to have mixed experiences with productivity, collaboration and culture.
• Consumer-dependent businesses remain affected by changed spending patterns post-pandemic.
• Labour market pressures for businesses have eased with only 25% requesting support to find employees – down from 38% in 2022.
• The experiences of businesses in the central versus eastern, western and southern parts of the city reversed in 2023. Centrally located businesses have performed stronger over 2023 compared to other areas, particularly for consumer-dependent businesses, as foot traffic returns.

Support

• The top priorities identified over the next 12 to 18 months are strengthening their marketing capabilities and customer acquisition and retention.
• Similar to previous surveys, consumer-dependent businesses are more likely to need precinct-focussed support. Office-based businesses would prefer business support grants and less red tape and regulation.
• Many businesses are also shifting their focus away from product and service development towards business continuity and resilience, from 36% to 40% of businesses.
• Cyber security and new technologies are an emerging focus.

Industry insights

• Hospitality businesses are struggling financially and are more pessimistic about the next 12 months compared to other sectors. 75% of hospitality businesses are still operating at below pre-pandemic capacity and 40% have reduced staffing since last year.
• Despite a large share of retail businesses being financially worse off, the sector remains optimistic. Half of retail businesses are still operating below pre-pandemic capacity and 66% indicated they are financially worse off compared to last year.
• Financial services have the highest share of businesses that are financially better off this year. They are optimistic about their performance over the year to come. Professional and service-based businesses have worsened slightly over the year.
• Office-based creative businesses are generally confident about the year to come, despite mixed financial performance over the past year. Consumer-dependent creative businesses have struggled and are overwhelmingly pessimistic about the future.
• Tourism businesses are optimistic about their performance as international visitors return. Most tourism businesses indicated they were financially better of this year compared to last year.

We’ll use the insights of this survey to design programs and initiatives to support our local business community to thrive.