A relentless year of interest rate hikes is impacting borrowing costs, mortgage repayments and the price of everyday essentials, resulting in consumers taking a more measured approach to spending. Furthermore, there is a generation of consumers who are yet to experience an interest cycle. These consumers will continue to remain cautious, prioritising value this holiday season until the market stabilises.

As the importance of data privacy continues to evolve, anticipating threats is critical to data security. Due to a significant increase in online retail sales, more sophisticated methods are being used to understand customer behaviour. However, retailers are currently lagging behind on data privacy and trust, directing impacting their bottom line. In a recent survey, 35% of customers chose not to buy a product due to specific personal information being requested.

Generative AI is reshaping our industry and the first retailers to harness AI’s capability will set the benchmark for consumers. As AI adoption accelerates across all aspects of the value chain, from personalised product recommendations to demand forecasting, tools like ChatGPT and DALL-E can be leveraged by retailers to gain deeper insights into consumer preferences, behaviours and purchase patterns to tailor ground-breaking shopping experiences.

The retail recession continues through its third consecutive quarter of downturn, however broader signs of moderation are signalling an improvement in performance heading into 2024. In the short-term, retailers will need to toe the line between balancing margins, wage increases, superannuation guarantees, and payroll tax, as well as state government levies including Victoria’s mental health surcharge. Appetite for risk will remain low as the industry transitions into recovery. 

Australian entities need to be prepared if they are to take the ISSB standards in stride when they come into effect in July 2024. Ethical product sourcing and responsible production processes can minimise the industry’s footprint and promote more considerate purchases. Retailers who successfully set these foundations will reap the benefits of delivering on ESG imperatives whilst building trust with their consumers.