In its latest Australian Retail Report, Shopify identifies key trends shaping the industry.

“Innovation is invaluable: 99 per cent of retailers plan to invest in innovation in the coming 12 months, with business intelligence the No. 1 area in which they plan to increase their technology spend,” the report says.

“This focus on data and analytics can drive other technologies that support innovation aimed at efficiency, such as automation and AI, while supporting broader growth tactics.”

Meanwhile, Broughton says, there is surging demand for value among local consumers, and “a strong preference for omnichannel shopping experiences, and a renewed focus on efficiency among retailers as they tackle rising costs”.

Consumer behaviour

Currently, 79 per cent of Australians are cutting down on expenses, and over half are looking for the best value when they shop, the report found.

“Retailers face a dual challenge,″⁣ Broughton says. While 34 per cent face challenges related to rising customer expectations, 25 per cent are facing falling consumer spending.

However, retailers are well-positioned to tackle these challenges and capitalise on opportunities.

“Shopify just launched 150-plus new updates and we invest $US1 billion each year on research and development to create and deliver the most effective industry-leading commerce technology to help retailers grow,” Broughton says.

Efficiency through tech

Tech investments are seen as central to enhancing efficiency and meeting the demands of consumers, Broughton says. “Business intelligence is the No. 1 area [where] Australian retailers planned to increase investment in the coming year, with 65 per cent of retailers citing it, even more than AI and automation.″⁣

These technologies drive efficiency, with business intelligence underpinning AI and automation, both of which need good data.

In addition to business intelligence, 58 per cent of retailers are planning to increase investment in commerce systems over the next 12 months, and 56 per cent are also planning to invest more in inventory management systems.

“Efficiency issues, including lack of operational efficiency, inefficient supply chain practices, and manual processes, are a major contributor to retailers’ internal challenges in 2024, impacting some 61 per cent of retailers,” Broughton says.

Importance of data analytics

Data analytics plays a crucial role in guiding investment decisions for retailers and is ″⁣a key area in which retailers can differentiate themselves and improve their business outcomes”, Broughton says.

However, for data analytics to work effectively, retailers need to consolidate their data and ensure it is not siloed in discrete business systems.

Enhancing customer experience

Technologies like business intelligence, AI, automation, inventory management systems and commerce systems are all aimed at ultimately improving the customer experience.

For example, an investment in tools to keep track of key business data and metrics and help mitigate issues with low or no stock issues.

″⁣Investment in an inventory management system can give a retailer greater oversight of their inventory so they can provide customers with real-time visibility of stock,” Broughton says.

Unified commerce

A unified commerce strategy is essential for retailers to meet evolving consumer preferences.

“Interestingly, 43 per cent of Australian consumers prefer shopping in store, 5 per cent more than last year, and proportionately more than those who like shopping online, at 31 per cent,” Broughton says.

But 26 per cent of consumers enjoy shopping online and in store equally. This shift highlights the need for a robust omnichannel strategy.

Impact of global disruptors

Global market forces are also shaping investment decisions. Disruptive international marketplace operators like Shein and Temu have captured over $2 billion in Australian spending.

“Forward-thinking retailers know they need to invest to remain competitive, with artificial intelligence and sustainability being two priority areas,” says Australian Retailers Association chief executive Paul Zahra.

“Even smaller retailers have prioritised the investment in artificial intelligence in the coming year ahead – knowing it can not only help them reach a larger portion of customers, but also help reduce costs in many areas.”

In response to these pressures, retailers are focusing on investments that drive value through enhanced customer experiences.

“This could include expanding a customer’s choice by adding a new product range, offering a virtual shopping assistant, or improving convenience through an online market offering,” Zahra says.

Please visit Shopify to download The Australian Retail Report 2024.