'Never been a downturn like this': Businesses battle cost-of-living crunch

Thursday, 8 June 2023

Megan Hutchison says she is now more conservative when it comes to her own spending and product development.

Being a small business owner has never been tougher, says Auckland entrepreneur Megan Hutchison.

The cost of living crisis has meant a pullback in spending for many New Zealanders, and with the sales of her own keepsake journals down, it has forced the mum-of two to think outside the box and consider services she never thought she would.

Hutchison, who sells a range of wedding planners, journals and baby books under the Forget Me Not Journals brand, says her sales have halved from the start of the year, and to combat that she has got into embossing and personalisation.

That was something she would never have considered nor had the time to do if her business was thriving, the former lawyer said.

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“I have noticed sales slowing down since the beginning of the year, [and I put that down to consumer confidence] and their ever-increasing costs,” said Hutchison said.

Hutchison had purchased a gold foil embossing machine for a future range of notebooks she had in the pipeline, but decided she would experiment with personalising once sales began decreasing.

Marcia Martin works multiple jobs just to stay afloat amid rising interest rates and cost of living increases.

She spent weeks experimenting with the machine, practising embossing on her linen journals and launched the personalised service around the end of April. She said it had paid off and helped to increase sales, with two in every three purchases now wanting personalisation.

“People have always asked me if I can personalise the Little White Book or if I could completely change a cover of a journal and put a name; I knew it was something people wanted and until now I’ve had a blanket ‘absolutely not’ and thought it was well beyond my capabilities, but I think I set out to test myself.

“I have so many different colours and every one is a different linen and so there are so many difficulties in doing it, because I have to change the settings, change the pressure, sometimes even change the materials used between each of them, so when I say I never would have been able to do this in my busy time, I mean it,” Hutchison said.

“This is just not something I would have time to offer if the business was thriving like it used to be,” said the one-person business.”

Hutchison said embossing was not scalable for her one-person business, and it was losing money by doing it, but she did it out of necessity, to separate herself from competitors and to build a relationship with customers.

To do this long term, she said Forget Me Not Journals would have to employ a staff member to help out.

Hutchison said sales on her own website had not only slowed, but she had noticed a pullback in product buying intentions from stockists. Some were no longer buying new product, while others were ordering much smaller quantities.

She said she was thankful she didn’t have wage bills to manage, had reduced her overheads and was moving to a made-to-order model to reduce costs and mitigate risks.

Fashion curator and designer Hami Akhondzadeh, owner of fashion brand Hami, has started hosting styling events.

“In my eight years’ experience, there has never been a downturn like this. It has never been harder, never been more expensive in terms of my advertising, in terms of the amount of time I put in to getting a sale.”

Hutchison isn’t alone in feeling the pinch of a spending downturn.

Auckland fashion consultant and retailer Hami Akhondzadeh said foot traffic in her Auckland store had slowed in recent months, and she had now turned to hosting styling events to increase sales.

Akhondzadeh, who opened retail shop Hami on Ponsonby Rd last September, said running the shop had not been as easy as she had initially thought.

But starting the new model three months ago, increasing her focus on events and styling up to 10 women at a time, had helped to keep things ticking along, alongside the sale of European brands in the store.

She said she had also begun work on designing and producing her own range of clothing as another way to better control profits and sales amid the downturn.

Akhondzadeh hosted five events in May, and said her styling service had proven to increase sales.

“I had a fashion show for a charity in Waiheke and I donated a Hami’s styling night to the charity, and then seven of the women came in and purchased so many of my outfits because they got to feel my fabrics and put them on and see how amazing they looked,” she said.

The Iranian expat who moved to New Zealand six years ago held pop-up shops prior to opening her store and had more than a decade’s experience in the fashion industry.

“The average sale per person is three to five items in my store,” said Akhondzadeh, adding her styling sessions were about two hours long. “Styling definitely brings more sales.”

Hami expects to launch its own range of clothes by the end of the year.

“If you manufacture your own line, you can control every single aspect; you can control the fabric, the design, the price, the quantities, for me that’s the goal.”

Akhondzadeh said businesses needed to be proactive and think outside the box to make sales in the current economic environment.

“We are in a crisis, and we should see that. The spending money model of people has changed and for surviving the situation we need to be more proactive.”