Despite vast macroeconomic challenges, consumer retail confidence has remained exceptionally strong. Recent ABS data showed retail trade increased 7.7 per cent year on year in November 2022, helped by major Black Friday and Cyber Monday sales, and in the lead up to Christmas, Australians spent a record-breaking $74.5 billion (up 8.6 per cent from 2021).

While other industries were hit hard during the pandemic, the retail sector was sustained by the eCommerce boom that emerged during lockdowns. Once restrictions eased, retail continued to perform as consumers engaged in ‘freedom’ and ‘reward’ spending.

But market positivity is now challenged due to economic uncertainty and inflation creating indefinite ambiguity. Retailers are left battling rising operating costs associated with fuel, energy, labour, supply chains, and rent. At the same time, consumer sentiment is destabilising as a result of surging living costs.

The strong momentum is bound to turn this year, according to Paul Zahra, CEO at the Australian Retailers Association (ARA), who flags inflation, the rising costs of doing business, supply chain disruptions and staff shortages as ongoing concerns.

“These results reinforce the retail industry’s permanent state of disruption and the need for retailers to remain resilient in the face of economic headwinds and external pressures beyond their control,” said Zahra.

In the face of these challenges, the business of retail has become a battleground for lifelong loyalty. Sellers and individual brands can no longer lean on big names or hype. Instead, it’s crucial to establish close relationships with consumers by anticipating customer expectations and connecting all operational dots.

Digital technologies prove instrumental in this battle. Data-driven loyalty programs have helped organisations understand what customers like and ensure it’s stocked. Likewise, the ability to sell online so easily has removed geographic and time barriers that deterred shoppers over a decade ago.

But we are now in a new era; one where retailers will need to do more than simply buy the latest tools. Retailers today should focus on creating a common ground amid those technologies so they can use the plethora of data they hold more effectively.

Digital platforms are only as good as their ability to communicate with other technologies used by retailers. Systems, applications, cloud services, data and people must all be connected, and all within a secure environment. This is the only way to ensure no important information or insights are overlooked or lost in the decision-making process.

Capitalising on invaluable data is fundamental to resilience in the current macroeconomic climate. Accurate, real-time data enables retailers to gain a comprehensive understanding of individual customers, creates stability for operations, makes employees more productive and impactful, and delivers visibility across vast supply chains. These factors combine to minimise the brunt of disruptions, keep costs down, and drive better customer experiences.

If we look at a day-to-day example, shoppers should get more than recommendations for pants and shoes from similarly-priced brands when buying a shirt. If the shopper is searching for ethically-sourced shirts, the retailer should be able to point them to information on environmental impact and sustainable sourcing practices. The same applies for groceries, electronics, furniture, homeware, and so on. Companies can’t provide this level of customer service if their data is sitting on dozens of different systems, especially with resource shortages.

On the supply chain side, a 2021 report from Australia Post and Deloitte identified the top areas for ‘strong focus’ include investment in digital and technology (47 per cent), improved visibility (44 per cent), inventory optimisation (42 per cent), and increasing resilience (34 per cent). When it comes to what technology innovations businesses are  considering investing in, predictive analytics was a priority for 67 per cent, warehouse automation for 57 per cent, and artificial intelligence for 40 per cent. As investment pours into these capabilities, it’s crucial for retailers to ensure their data is fully integrated so these technologies can perform at their best.

For example, the cost of milk has gone up. Manufacturers can’t alter material costs, so they’re turning to technologies that create better visibility within their supply chain, drive automation, and reduce human errors. Ultimately, as input costs go up, better data visibility drives efficiency in the middle so manufacturers and retailers can still be profitable.

Freedom Furniture is demonstrative of the outcomes of connecting digital systems to deliver effective data insights. The retailer integrated dozens of business-critical systems, including ecommerce, order management, shipping management, and point of sale, allowing it to centralise operational, customer and transactional data and create a singular view of every part of the business. The integrated, modernized IT infrastructure now not only accurately informs business decisions, but also offers personalised recommendations and helps sourcing teams identify, secure and onboard local suppliers with distinct Aussie design flair.

As the retail industry leans on digital transformation to offset future uncertainty, connected data will be essential for organisations seeking innovative ways to establish lifelong loyalty despite anticipated drops in consumer spending. Integrated, accurate, real-time data lays a foundation for stability across operations, customer experience, and supply chains, reducing costs and ultimately attracting shoppers as competition heats up.

Nathan Gower is director for Australia and New Zealand at Boomi.