Sydney CBD’s Small Businesses Navigate Foot Traffic Slump and Rising Costs

Sydney CBD’s small businesses are confronting a tough operating environment as consumer spending tightens and pedestrian traffic remains well below pre-pandemic levels. The retail sector, which accounts for 35.3 per cent of all local businesses and employs 66,169 workers, faces a 55 per cent reduction in foot traffic compared with pre-COVID figures, according to data from the City of Sydney.

A sector under pressure

With more than 7,320 retail businesses operating across the CBD, the sector is the city’s largest private employer. But the steep drop in pedestrian numbers, a hangover from changed commuting habits and the rise of remote work, has forced many small operators to rethink their business models. Bars, restaurants and specialty retailers have been especially hard hit, as fewer office workers and tourists walk through their doors on a daily basis.

The CBD Sydney Chamber of Commerce, which represents a catchment area of approximately 24,000 businesses including those in Surry Hills, Darlinghurst and Potts Point, has been running regular Business Spotlight events to help small operators connect with each other and with potential customers. The Chamber’s November BackBone Event is one such gathering designed to foster collaboration among local entrepreneurs.

Programs aimed at driving traffic

Two major initiatives are trying to reverse the trend. The Vivid Sydney 2026 Local Business Program, which runs from May 22 to June 13, invites bars, restaurants, retailers and on-water operators to showcase their offerings to the festival’s millions of visitors. The program is designed to turn the city’s biggest tourism drawcard into a direct boost for local businesses.

Separately, the American Express Shop Small campaign, now in its sixth year, is offering card members $10 credits for every $20 spent at participating small businesses between November 1 and 30. The campaign aims to channel spending toward independent shops and eateries during the critical pre-Christmas trading period.

Recognising leadership amid the headwinds

Despite the challenges, the sector continues to produce standout entrepreneurs. Gina Yazbek, founder of Sydney CBD-based construction project management firm Commnia, was named Outstanding Business Leader for 20 employees and under at the 2024 Sydney Business Awards, described by organisers as the “Oscars of Small Business.” Her recognition underscores the resilience and innovation that small-business owners are bringing to the city’s economic recovery.

For now, the outlook remains cautious. Small operators are watching pedestrian counts closely, hoping that major events and targeted spending campaigns will begin to close the gap with pre-pandemic foot traffic levels. Without a sustained recovery in visitor numbers, many will continue to operate with reduced capacity and tighter margins.

This article is general information only and is not personal financial or investment advice. Consider your own circumstances and seek licensed professional advice before making financial decisions.