The large majority of Australians prioritise purchases that represent good value for money, with close to a third of Australians prioritising value over all other decision-making factors. Australian direct-to-consumer luggage start-up July, for instance, has had success in tapping into this Australian desire for value by promoting the lifetime warranty consumers enjoy when they purchase a suitcase.

Despite this rising focus on value, almost half of the consumers surveyed claimed to have bought from another brand because of price (49 per cent); proof that price remains the biggest predictor of whether a customer will churn. This puts retailers in a tricky position, as nearly all admitted to combating inflation by passing on at least some, if not all, of the higher costs on to consumers.

Clearly, something has to give — consumers will churn if lured with better prices, yet retailers must also work to protect their business from the impacts of inflation. In this environment, retailers should be considering all levers they can pull to retain and grow their customer base without having to overly discount. For the majority of businesses we spoke to, this means investing in solutions that help them connect with their customers more effectively and, of course, more efficiently.

Artificial intelligence and automation more broadly have been identified as providing particularly compelling use cases for retailers who want to connect with their customers effectively and maintain operational efficiency. ASX-listed Accent Group agrees AI and automation needs to be a priority, as they leverage it to support automating manual tasks and processes within their distribution centre. But really, the application of these technologies is limitless.

AI-enabled chatbots can help retailers provide personalised communications at scale and manage conversations across multiple online platforms in a fraction of the time it takes to achieve this manually. Shopify has also been experimenting with how AI can be applied effectively to retail businesses, like Shopify Magic that generates engaging product descriptions for online stores.

Beyond value and price, product availability continues to drive purchase decisions, as well as convenience — a value that was of particular importance to high-income households. These findings make sense. The more frictionless the purchasing journey, the better the experience and the more likely that consumers will follow through with their intent.

With a reasonably even spread of online and in-store preferences among surveyed consumers, being able to curate a seamless customer experience across all channels is essential. Only the most price-sensitive consumers have a clear preference for physical retail. Omnichannel remains a crucial strategy for retailers seeking to capture as much market share as possible.

Data integration can help refine the customer-experience offering by gathering consumer insights from across all touch points to provide a 360-degree view of the shopping journey. With a clear understanding of how consumers connect with a retailer’s business across channels, decision-makers can then fine-tune the customer experience to ensure convenience and consistency, regardless of the channels used.

With such variation among the factors that drive purchases across different consumer segments, staying connected to customers and understanding what drives them in the current environment should be a top priority.

Retailers who take a good look at their strategies and tactics, and adapt them to suit today’s economy and evolving consumer behaviours, are best placed to come out stronger on the other side.

James Johnson is director, technology services and enterprise (APAC) Shopify.

For more information, download the Australian Retail Report 2023.