It’s no secret that the last few years have been tough on retailers. Inflation, labour shortages, pandemic recovery, supply chain issues and rising costs of living are just some of the biggest issues facing retailers today. All the while, there’s increasing pressure to meet ever-changing customer needs and demands.
However, if there’s one thing we know about Australian businesses, it’s that they’re strong and adaptable. These challenges, while tough, present opportunities for Aussie retailers to make small changes to their business that build long-term resilience enabling them to come out stronger on the other side.
To uncover how retail businesses are feeling during this turbulent period and what they can expect in the months ahead, we partnered with YouGov to develop Square Australia’s first Future of Retail report, with insights based on a survey of over 500 retailers and 1000 customers.
Here are three trends we’ve uncovered, and what they mean for retailers in 2023.
Omnichannel commerce will continue to be critical, as will social media
COVID-19 forced retail businesses to reassess how they sell to customers. As stores closed and in-person commerce ground to a halt, many retailers increased investment in digital channels.
Those who made the shift reaped the rewards, considering 34% of Aussies increased their monthly online retail spending during the post-peak pandemic period. But as people also return to brick-and-mortar stores, it’s also important to provide a seamless shopping experience across all channels.
Social media has become a popular way to shop among Australians, especially for Gen Z. 18% of shoppers of all ages have increased their shopping on social platforms compared to the peak pandemic period, while 51% of Gen Z shoppers prefer to shop directly on social media.
Australian Retailers Association CEO Paul Zahra says those not set up as omnichannel retailers will struggle to compete.
“The pandemic highlighted just how important it is for businesses to have an online presence and that they’re able to cater for customers whichever way they want to interact with their business – through a mobile phone, computer or in-store.”
Retailers must start by finding the best ways to earn customers’ loyalty and doubling down on what’s most important to them.
Staff shortages will lead to rapid tech acceleration
Finding workers remained a challenge for retailers in 2022, with more than 41,000 retail job vacancies at the time of our report. A third (31%) of retailers believe attracting and retaining staff will remain a top challenge for at least the next six months. Our research found 82% currently outsource roles, while 34% increased wages in response to the competitive labour market and inflationary economy.
In response, a majority of retailers are using or plan to use technology or automation to speed up time-consuming tasks. Retailers told us they are looking to decrease staff members’ hands-on time across areas such as stock management (28%), order tracking/shipping/returns (27%) and marketing (25%).
Tom’s Project NSW Director Youngmin Jo says transitioning from paper records to an in-store POS system saves time “when processing sales in-store, managing inventory and reporting”.
Leaning into technology to reduce unnecessary admin burden gives staff time back to focus on more valuable tasks – that could be customer service, or marketing to power more growth.
Conscious shoppers will grow in influence
Rising costs of living have changed the spending habits of 68% of Aussie consumers. The good news for retailers is 87% believe it’s more important than ever to shop local and support Australian businesses.
To stand out in a competitive market, retailers must keep in mind that shoppers are increasingly concerned about where they spend their money. Our research found 88% care about business values.
Ethical issues are now front of mind for consumers: transparency about where products are made and are important considerations for more than half (53%), while a similar number (59%) value local produce.
Gen Z is driving this change and has a strong desire to shop with companies they believe share their ethics and values. The Afterpay Retail Trends Report 2022 found 57% of Gen Z buy sustainable products where possible and 42% are loyal to brands with transparent, ethical advertising.
This audience’s influence and spending power is only set to increase, so retailers should look closely at their brand values and ensure that they are practicing what they preach. Whether it’s operating more sustainably or ensuring your items are ethically sourced – customers will be quick to figure out whether or not a business is authentic or not.
However, our report suggests change is already underway, with 40% of retailers planning to evolve their brand to appeal to customers’ values and 35% indicating they will stock Australian-made or sustainable products.
Setting up for future success
As the retail landscape continues to change, the most successful businesses will be those that are willing to adapt and make use of technology to boost their offerings.
Customers increasingly want to interact with business online (via mobile and computer) and in-store, so savvy businesses will focus on making this shift if they haven’t already.
By investing in automation, omnichannel solutions and data, retailers will be more resilient to future challenges and get better at meeting consumer demands.
Colin Birney is head of business development at Square.