Australian retailers are facing growing digital maturity gaps, underused technology, and mounting pressure to deliver returns from retail media, according to Arktic Fox’s Digital, Marketing & eComm in Focus 2025 report.
Now in its fifth year, the study surveyed over 200 senior leaders in retail, marketing, and e-commerce. It reveals that most brands are still adapting to rapid change driven by AI, shifting customer expectations, and economic uncertainty.
AI adoption is rising, but few are ready to scale
Key findings show that nearly 75 per cent of brands are undergoing or planning transformation. While 59 per cent are exploring AI and GenAI to improve personalisation, only 14 per cent believe they are close to achieving a unified view of their customers. Three in four say their e-commerce maturity is behind global leaders, and more than half express low trust in retail media networks.
Retailers are also struggling with budget pressures. Seventy-eight per cent saw no increase or a reduction in digital and marketing budgets last year. Despite this, most say customer experience (CX) and personalisation remain business priorities.
Still, 64 per cent of retail leaders consider their CX maturity to be “emerging” or “underdeveloped.” Just 23 per cent feel they’re using their marketing technology well. Only 17 per cent believe they are using AI effectively for content creation.
“We are also seeing a clear shift in mindset from brands this year around generative AI. Some are moving beyond experimentation: re-skilling teams, embedding AI in workflows, and building governance to support scale,” said Teresa Sperti, Founder and Director of Arktic Fox.
AI usage is growing but uneven. Half of brands are testing GenAI to generate content, while nearly a quarter are scaling these efforts. A similar pattern is seen in using AI to generate insights. Still, advanced use of predictive analytics is limited, mostly among companies earning over $100 million.
“But while adoption is growing, most brands still face barriers to unlocking AI’s full potential. Only 14 per cent have a mature, unified customer view, despite it being a key investment area,” said Sperti.
“Without strong data foundations, efforts to use AI for personalisation and experience delivery will fall short.”
CX remains a focus, with 86 per cent of brands planning to maintain or grow investment in the next 12 to 18 months. However, only 37 per cent say their organisation is aligned on a CX vision, and 39 per cent admit their marketing and digital teams are underperforming.
“AI will transform how brands and customers engage and how customers and buyers shop. For brands still early in their CX maturity, this presents a major opportunity to rethink their future,” said Sperti.
According to Jaye Vernon, Area Vice President for Braze, having a partner at the table who offers an evidence-based perspective is essential for shaping strategy and delivering measurable business results.
“The brands that lead are those that align cross-functionally, engage customers in the moments that matter, and treat every interaction as an opportunity to build trust,” said Vernon.
“Taking it a step further, those that are focusing on making human, responsive engagement not just possible but practical at scale is what sets successful CX strategies apart.”
Over half of brands are prioritising data unification to build a unified customer view. Despite being critical to improving customer data resolution, only 25 per cent are investing in identity resolution, as it is a low priority.
Billy Loizou, Area Vice President for Australia at Amperity, finds this contrast noteworthy.
“For companies with over a billion dollars in revenue, unifying customer data was the number one priority. However identity resolution was a much lower priority,” said Loizou.
“This is really eye opening because you need identity resolution in order to get to a unified view of the customer. Without robust identity resolution, personalisation fails and growth stalls. Closing this gap isn’t optional; it’s a strategic imperative for any business serious about success.”
E-commerce recovery highlights divide in capability
Australia’s e-commerce sector rebounded in 2024, with households spending over $69 billion online. However, growth varied widely as 28 per cent of brands saw over 20 per cent growth, while 30 per cent saw less than 10 per cent. Leaders with higher e-commerce maturity were more likely to report gains.
Top challenges include limited investment, under-resourcing, and inflexible tech. Most brands said improving the end-to-end customer experience is their top e-commerce goal, followed by profitability and expanding channels.
Sperti noted that many brands are stretched thin across growing platforms like Temu and Amazon.
“Simply being present within an array of channels isn’t enough. To stay relevant, brands must deliver fit-for-purpose experiences across their digital shelf and e-commerce channels,” she said.
Only 39 per cent of FMCG and CPG brands say they can share product content seamlessly with retailers.
Gillian Smythe, ANZ Managing Director at Salsify, said many retailers still rely on outdated, manual processes for collecting product data, leading to poor content and lost sales.
“Each retailer has a separate, often manual process for product data collection – usually using outdated methods like spreadsheets or old, legacy portals. Suppliers have stretched resources to manage complex retailer requirements, which leads to poor content quality and e-comm performance on the retailers’ sites,” said Smythe.
“To create the best experience for customers, retailers need to support suppliers with modern, automated and intelligent systems to efficiently manage product content exchange at scale.”
Retail media investments rise, but trust and ROI are concerns
Retail media in Australia escalated to $2.6 billion in 2024 and is forecast to increase by 15 per cent in 2025. Retailers such as Priceline, Bunnings, and Petbarn have established their retail media networks in the past year.
As the sector continues to evolve, brands are showing cautious behaviour. While 55 per cent plan to maintain their level of spend over the next 12 months, 8 per cent intend to reduce it.
A huge 96 per cent of respondents struggle to quantify return on investment.
“Retail media may offer a way to offset e-commerce margin pressure, but many lack the internal capability, across data, audience management, and reporting, for their own growth purposes,” said Sperti.
“Trust and transparency are hygiene factors. Retailers must demonstrate value beyond ROAS or risk weakened supplier relationships and reduced investment.”