Swapping 10% of spending from large to small retailers could unlock $76B for Aussie small businesses

Melbourne, Australia — 8 December, 2025 — If Australians redirected just 10% of household spending from big businesses to small businesses, it could mean $76 billion more in the hands of small retailers according to analysis by global small business platform Xero. This figure highlights the immense power of consumer spending in the lead up to Christmas.

Xero economists calculated this figure by analysing ABS 2024 total household consumption data. Excluding spending unlikely to be with small businesses, such as utilities, and some transport and communication, $758 billion in potential household spending remains. Redirecting just 10% of this could leave small businesses $76 billion better off.

“The data tells a powerful story: a simple ten percent shift in spending unlocks a massive $76 billion for the small business economy. While major retailers have the war chest to sustain marathon sales campaigns from Black Friday to Christmas, small businesses have to be more disciplined. This holiday season, where you spend matters more than how much you spend,” said Angad Soin, Managing Director AU/NZ and Global Chief Strategy Officer at Xero.

“We’re calling on conscious consumers to consider where they can make spending swaps from big businesses to small this holiday season. We recognise that everyone has personal circumstances and household budgets to consider, but shopping small doesn't always have to cost more. It’s about remembering that every purchase from a small business isn’t just a transaction; it’s an investment in local families, jobs, and communities.”

Amidst economic challenges, small businesses need ongoing support

The call to action follows a turbulent period for Australian small businesses, with Xero Small Business Insights (XSBI) data showing sales growth slowed earlier in the year. However, the data from the September quarter 2025 offered a welcome sign of recovery, with sales growing by 5.5% year-on-year (y/y) – the strongest quarterly result in two years.

Despite the rebound, this uplift is yet to be fully reflected in hiring confidence. Jobs growth slowed slightly to +2.7% y/y in the September quarter, demonstrating that small business owners remain cautious about taking on new staff.

Council of Small Business Organisations Australia (COSBOA) Chair Matthew Addison said, “While we’re cautiously optimistic about the health of our small business sector, we must acknowledge that it’s a challenging time – particularly for small retailers competing for their share of pre-Christmas sales. Like Xero, COSBOA is calling on Australians to shop small this holiday season. Knowing that $76 billion could potentially be redirected towards small businesses shows the collective power of our conscious consumerism. The choices we make at the checkout – especially over the coming weeks – can give our nation’s entrepreneurs the confidence to keep investing and creating jobs in 2026. This is meaningful stuff.”

Strategic opportunities underpinned by digital tools

In a recent survey of 500 Australian small business decision-makers, Xero found that just over one in four (41%) go on sale somewhat often throughout the year, while 15% go on sale very often. The top reasons for doing so include to reach new customers (57%), and to boost sales and increase cash flow (55%). Beyond promotions, small businesses say the most effective ways to attract and retain customers year-round are social media engagement (47%), and providing personalised offers or experiences (34%).

“The key is to be strategic,” said Soin. “Small businesses win on service and genuine connection. They can compete effectively by using digital tools to understand their costs and set promotions that bring in new customers without eroding their margins. Focusing on the value of a personal, high-quality experience can be just as competitive as slashing prices.”

When it comes to using digital tools to prepare for the holiday season, Xero shared some tips for small business retailers:

• Dive into last year's sales data. Use visualisations to understand where you actually made money, to help purposefully prepare for this year. UI: AI insights, profitability drill down

• Check your margins before you slash your prices. Dashboards give you a quick, clear view of your profitability, helping you to understand how discounting impacts your bottom line. UI: dashboard widgets

• Need a last-minute stock up? See how it will impact your cash flow. Use cash flow manager to forecast the impact of a big purchase on your business's finances to help you know how far you can splurge this Black Friday without running out of cash when you need it most. UI: add cash

ENDS

Media Contact

Xero Australia | Jess Brophy | Director of Communications, ANZ | +61 431 268 549 | jess.brophy@xero.com

About Xero

Xero is a global small business platform that helps customers supercharge their business by bringing together the most important small business tools, including accounting, payroll and payments — on one platform. Xero’s powerful platform helps customers automate routine tasks, get timely insights, and connects them with their data, their apps, and their accountant or bookkeeper so they can focus on what really matters. Trusted by millions of small businesses and accountants and bookkeepers globally, Xero makes life better for people in small business, their advisors, and communities around the world. For further information, please visit xero.com.