It’s no secret that Australia’s retail landscape has gone through significant changes in recent times. Economic shifts have led to reduced discretionary spending, with the Shopify 2024 Australian Retail Report finding 79% of Australians are cutting down on something to save money, forcing retailers to find new ways to demonstrate value.
At the same time, retailers are grappling with tighter budgets and higher operational and supply chain costs. With the top internal challenge faced by retailers being poor staff retention, followed closely by a lack of operational efficiency, retailers are seeking new ways to do more with less, concerned with how to drive growth without straining human capital and lowering profit margins.
This can all lead to retailers constantly thinking about where to save money and cut budgets, but in this climate it’s equally important to think about your investments. By strategically investing in the right areas, businesses can overcome hurdles and wield powerful growth drivers.
Shopify’s recent report revealed some of the top investment priorities for retailers in the next 12 months, and a few that stood out to me are customer retention (63%), customer acquisition (62%) and expansion into new international markets (59%).
More broadly, looking at how to demonstrate value in different ways to drive growth, there are steps that all retailers can take to increase investment and maximise efficiency in these areas needed to accomplish a greater value proposition for consumers:
Investing in customer retention
Today’s consumers would become loyal to a brand if it offered them something, most notably consistently low prices. Yet lowering prices isn’t always feasible – certainly not in an ongoing capacity – due to rising supply chain and logistics costs, as well as increasing wages. This leaves retailers to compete on other non-price related approaches to fight for customer retention and loyalty, using tactics like rewards points, member-only exclusives, and special treatment.
Something we are increasingly hearing in conversations with Australian retailers is also the growing awareness around the less obvious drivers of customer experience, like efficient warehouse and inventory management, along with offering a simple and fast checkout experience. This is something we see in our research too, with data showing that when it comes to factors that drive customer loyalty, a third (32%) of shoppers prioritise a seamless user experience.
All of this is to say that customer retention and brand loyalty isn’t something to be gained purely by competing on price and flashy marketing tactics. Homing in on the customer experience and creating a seamless shopping journey both during and post-purchase can be an effective way to compete and grow in today’s dynamic marketplace.
Investing in customer acquisition
A personalised experience is a differentiating factor not linked to price that retailers can weave into their marketing and engagement activities. Offering customers relevant products at the right time will work to drive customer acquisition and further secure customer retention.
And the personalisation needed for such tactics to drive alternative forms of value in the eyes of consumers depends a great deal on technology, with first-party data perhaps the most valuable resource retailers have at their disposal to drive personalisation.
However, making the most of data can be tricky. It’s not always a simple proposition. This is why retailers should be investing in digital infrastructure that unifies data and provides insight across multiple sales channels and the entire business, whether it’s an end-to-end enterprise resource planning (ERP) solution, a commerce platform that can operate across every channel, or something similar.
What retailers shouldn’t be doing is setting up multiple solutions that serve a singular purpose, because this will result in data getting tangled up in individual siloes, making it virtually unusable. Unified data makes for a unified approach to personalisation, ultimately boosting customer acquisition.
Investing in expansion
Lastly, expanding into new markets can be a great way to grow a retailer’s audience. I’m always inspired by the growth and scalability some retailers manage to experience — for example in last year’s Black Friday Cyber Monday sales period alone, we spotted a Melbourne merchant selling to a customer in Spain, a distance over 18,000km.
While expanding into new markets can seem daunting and costly, retailers can simplify the process significantly by leveraging the right tools and platforms. Shopify Markets, for example, democratises international selling by providing merchants with the tools to create localised storefronts, manage logistics, compliance, currencies and the other complexities of going global, all from our platform. Our expansion store capability also helps with creating customised experiences and has helped brands like Who Gives A Crap launch dedicated B2B stores for wholesale customers.
Overall, Australia’s retail sector is undergoing a profound transformation and these changes are necessitating agility from retailers, pushing them to find new ways to enhance efficiency and drive growth. By focusing on crafting a streamlined customer experience, harnessing data for personalisation, and tapping into new markets, retailers can stay ahead of the curve and nail retention, acquisition and expansion in today’s retail reality.
Shaun Broughton is managing director for APAC and Japan at Shopify.