Understanding SME purchasing patterns: balancing costs, growth and resilience
A recent SME survey has shed light on purchasing patterns and influencing factors expected for small and medium enterprises (SMEs) in South Africa during the remainder of this year.
According to the results, the global economic environment – characterised by inflation, fuel price hikes and a weakening rand – is giving SMEs every reason to seek out more affordable purchasing options, possibly favouring suppliers that can offer competitive pricing or bulk purchase discounts to offset the financial strain caused by these macro-economic challenges.
Rising operational costs could mean limited SME purchasing power, prompting cost-cutting measures at many businesses.
The survey conducted by Lula, a leading local B2B credit partner and SME banking service provider, reveals that SMEs are prioritising investments in crucial areas such as technology, energy efficiency and operational assets, despite facing unprecedented challenges like loadshedding and global economic pressures. This strategic focus underscores a collective drive toward cost-effective, growth-oriented and resilient operational frameworks.
According to Lula’s chief marketing officer Tom Stuart, SMEs are the backbone of the nation’s economy, and their purchasing patterns constitute a great deal of overall economic activity. “The SME space is a vibrant ecosystem of collaborations and partnerships,” he explains. “Many B2B-oriented SMEs, for example, have other SMEs as both their customers and suppliers. Understanding SME purchasing patterns is crucial for suppliers, lenders and policymakers aiming to support their success.
“In the face of financial challenges, volatile market conditions and cost pressures, South African SMEs must carefully navigate their purchasing decisions and cash flow strategies,” he advises.
SMEs are strategically prioritising investments in key areas to drive growth, efficiency and resilience. Top purchasing priorities include technology and digital tools to streamline operations and enhance competitiveness, essential operational assets to support business continuity and growth, and stock replenishment to meet customer demands and maintain market share.
With SMEs hit by the worst loadshedding ever on record in SA in 2023, there is a marked trend among SMEs toward investing in energy-efficient solutions and alternative power sources or energy-efficient solutions to ensure operational continuity and mitigate the impact of loadshedding.
“While this push toward energy independence and operational resilience is promising, SMEs must carefully balance their investments to ensure financial stability,” says Stuart. “Adopting spend-savvy approaches and leveraging tailored financial tools will be crucial for SMEs to effectively manage their cash flow and maintain a healthy financial position amid these challenging times, especially with energy scarcity thrown into the mix.”
The survey found that external factors and global economic pressures are also affecting SME purchasing decisions. Stuart says that concerns around rand volatility and the need for financial efficiency may indicate a preference toward local suppliers. “This could present opportunities for SMEs to invest in mutually beneficial localised supply chains this year.”
Image credit: DC Studio/Freepik
