Three-quarters of chief financial officers (CFOs) are feeling optimistic about the current financial prospects of their companies despite challenges brought on by rising inflation, according to Deloitte's recent CFO Sentiment survey.
However, the uncertainty levels of CFOs remain higher than normal at 88 per cent – down from 95 per cent at the end of 2021.
“Coming into 2022, CFOs were confident about the financial prospects of their companies,” said Deloitte partner and CFO program leader Stephen Gustafson.
"Even as the economic environment has shifted, and uncertainty continues to dominate, this is encouraging."
Ninety per cent of CFOs also continue to cite difficulties in securing and retaining key talent as a business risk, which has become business-critical for some.
While the opening of our international borders had eased some of the pressure on labour supply, Gustafson said it was “essential to rework Australia’s immigration policy” to fix the skills shortage.
“Nearly 60 per cent of CFOs believe that focusing on improving culture, well-being and experience – and including hybrid working options – within their business was one key to lifting business productivity and supporting talent acquisition and retention efforts," he said.
Retailers brace for inflationary pressures
Meanwhile, new research from leading parcel-delivery company CouriersPlease (CP) found nearly nine in 10 retailers were bracing for economic challenges posed by the ongoing inflation crisis.
Australian retailers indicated they were prepared for continued inflation, higher interest rates and lower consumer spending in the coming months as the economic crisis raged on.
Specifically, 53 per cent of retailers revealed their profits were likely to be squeezed, while 50 per cent would experience lower revenue due to less spending, and 41 per cent would struggle to keep prices reasonable.
Other retailers foresaw having to postpone investment into the business, being unable to keep all their employees, and challenges meeting loan and rent payments.
Only 10 per cent of retailers believed their business would not be impacted at all.
The research, commissioned by CP, was based on a survey of an independent panel of 202 owners and decision-makers across Australian retailers.
Retailers take action to weather economic storm
In the past two years, 36 per cent of retailers revealed they had boosted their investment in eCommerce and marketing to weather the tougher economic environment.
Thirty-five per cent of businesses gave their workforce flexibility and nearly one-third expanded their product range.
Others reviewed suppliers, switched or renegotiated supplier contracts, introduced more efficient technologies, improved customer service, tapped into new customer segments, transitioned sales online and closed bricks-and-mortar stores.
Only 4 per cent of respondents had been too negatively impacted to make any changes.
Profits and revenue expected to take a hit
CP CEO Richard Thame said the results confirmed the widespread impact the current environment was having on the business sector.
“It appears that the economic climate will have the most impact on a company’s bottom line, with profits and revenue expected to take a large hit,” Thame said.
“With the CPI currently at 5.1 per cent, and an increase on the horizon, as well as interest rates continuing to climb, retail and logistics businesses will look for efficiencies across operations and other business areas to buffer these impacts.
“Retailers understand this year they will compete in a climate of reduced spending, and an online presence and a strong customer experience will help them maintain and grow their market share.”