Kirthi Duvoor, Head of Retail, Australia, New Zealand & APAC, TCS
Australia’s retail sector is set to face an increasingly complex landscape in 2025. From oversaturated markets to rapidly evolving technology and cost of living pressures, businesses are finding it harder than ever to compete with other brands and maintain customer loyalty.
Last year, the Australian retail sector saw a 69% increase in insolvencies, causing 768 retail businesses to halt their operations. To avoid this, businesses will urgently need to consider new solutions to remain competitive and overcome the increasing downturn in 2025 and beyond.
According to the latest TCS AI for Business Report 2024, 72% of retail companies in ANZ are currently reworking or planning to rework their business operations. As the skills and roles needed to thrive in retail change, retail businesses need to consider how a greater focus on technology and sustainability can help accelerate their growth. Already we have seen global retail businesses turn to AI to help alleviate some of the pressure with 93% of retail executives having AI implementations planned, in process or already completely.
With this in mind, let’s consider the top 5 strategies that Australian retail businesses can implement in 2025 to remain competitive, leverage technology and achieve greater sustainability.
1. Continually reinventing the customer experience
For retail businesses to remain competitive and thrive in 2025, they will need to continue pushing the boundaries and innovate how customers interact with their brand and products. Status quo is a path to irrelevance. But reinvention need not be only about futuristic technologies. Rather, reflect on customers’ pain points—be it the right assortment at the right place at the right time, faster delivery or recommendations that make routine shopping a breeze—and work to make their lives better. Advancements in AI and other technology make this possible for retailers this year, and winning in this area is a sure way to boost engagement and brand loyalty.
2. Leveraging AI to create real-time business strategies
To maintain long-term viability, Australian retailers will need to shift from traditional data analysis to real-time AI insights to enable agile decision-making and a deeper understanding of consumer behaviour. New AI services can provide valuable insights into live customer transactions so businesses can rapidly respond to changes in product popularity, sales performance and customer buying habits within a matter of minutes rather than in hindsight.
3. Diversifying for frictionless purchases
In an oversaturated market, retailers in Australia will need to diversify how they sell their service and products, providing customers with seamless shopping experiences in both physical and digital locations. Knitting together the right strategy, technology and execution is essential in offering faster, more convenient and more enjoyable shopping experiences, be it personalised promotions or app-based checkouts in– store. .
4. Redefining customer loyalty through AI-driven personalisation
Using point systems and rewards are no longer as attractive to customers as they once were. Australian retailers will need to prioritise building stronger connections with customers through personalised engagement online and in-store, using AI. They will also recognise investment in better customer experiences as a non-negotiable, whether it’s offering exclusive perks, larger return windows, faster delivery and high-value loyalty rewards.
5. Embedding sustainability into the product lifecycle
Australian businesses will need to recognise sustainability beyond the purchase of the product. More brands are integrating sustainability into their product lifecycle to empower shoppers to make informed purchasing decisions, such as pricier but lower-carbon footprint, longer-lasting, or reusable products. Other retailers are tapping into circular economy principles and new business models, such as buy-back programs, rentals, refills, extended warranties for sustainable products, and subscriptions. This not only boosts the reputability of a business, but also keeps customers engaged with the brand for years to come.
To thrive in 2025, retailers will need a diversified range of solutions, leveraging the best of technology to provide better customer experiences, product development and sales insights. However, navigating the fast-changing technology landscape can be a challenging task for retailers. According to the TCS AI for Business Report 2024, businesses are 1.5 times more likely to report excitement and optimism about their projects when leveraging external partners for AI implementations. Whether they go it alone or tap their ecosystems of partners, Australian retailers will be wise to find ways to embrace new innovations to ensure their business stays ahead of its competition in the new year.