The Future of Australian Retail – 2024 and Beyond – Introduction (1)

Future of Retail, 2030: Key Statistics 

The Australian e-commerce market is expected to register a CAGR (Compound Annual Growth Rate) of 13.7% during the period 2022-2027. 

Generative Artificial Intelligence (GAI) could contribute between $3 billion to $9 billion annually to the Australian retail sector by 2030, according to Microsoft and the Tech Council of Australia. 

In the eCommerce Market, the number of users is expected to amount to 5.7 billion users by 2028. 

Retail media could see Aussie ads market value increase from $1 billion to $2.1 billion by 2026. 

Future Shop windows will have interactive screens displaying ever-changing content – adapting to issues like the weather, time, and even to the person standing in front of the shop window. 

The AR and VR industry will exceed $11.5 billion by 2025. Yet, the implementation of AR and VR, in retail, is growing, and it’s expected to reach 1.4 billion by 2025. 

Gen Z and Millennials currently account for 36% of the total retail spend in Australia. By 2030, their share of retail spend will skyrocket to 48%, as more of Gen Z (currently aged 9-24) enter the workforce.  

The social commerce industry in Australia is expected to grow recording a CAGR of 9.8% during 2022-2028, and is expected to account for A$4.4 billion by 2030 (1% of retail sales). 

Products making ESG-related (Environmental, Social and Governance) claims averaged 28% cumulative growth over the past five years; and brands with ESG claims have higher loyalty, with a 34% repeat rate vs those that have lower levels at 27%.5 

Drone delivery has the potential to grow retail sales in Australia by $2.2 billion by 2030 and slash delivery costs for businesses by up to $800 million per year. 

Australian Retail Trend Predictions for 2024 and Beyond 

The burning question on every retailer’s mind as 2024 approaches is “What’s ahead for the Australian retail industry?” The answer is a bit of a mixed bag which comes with various challenges and hurdles, but there are huge opportunities for growth if you know where to look.  

Let’s take a look at the 14 anticipated trends that lie ahead for the Australian retail industry in 2024 and beyond. 

1. Rise of the Physical Store 

If the pandemic taught us one thing, it’s that time is finite. Once a chore, visiting retail stores is now an activity, a fun experience, an enjoyable way for consumers to spend their time. 

Consumers are quality-driven people who like to see what they’re spending their money on and to compare their shopping experiences against those of their peers. Reviews, opinions, feedback, and helpful tips are now expected from every interaction, everywhere. 

28% of consumers shop in-store more because of human interaction, real connections that are unlike any technical or mechanical interactions we have. 90% of retailers worldwide agree. 

Physical stores will be the most important channel in the next 5 years. So much so that 1 in 3 retailers are already prioritising staff training to ensure they satisfy the customer engagement aspects of the sale as more feet begin to cross the threshold. 

2. Using Neuroscience to Personalise Experiences 

Personalised interactions will become a standard, enhancing customer experience, conversion rates, and loyalty. In fact, personalisation is the reason behind 35% of Amazon’s revenue, and has the potential to increase retail revenue by up to 28%.  

And because 95% of consumer decisions are driven by emotions, 39% of Australian retailers state personalised consumer targeting is a priority for 2024.  

You can increase sales conversions by up to 71%​​ by using neuroscience to understand your consumers’ emotional behaviour-based purchasing decisions. 

3. Experiential Loyalty 

Strong emotional connections to retailers and brands are what drives loyalty. 70% of consumers are influenced by retailer loyalty programs. 35% readily admit it makes them visit more often while 19% state it influences them to spend more.  

However that loyalty can no longer be bought by endless discounts, de-valued points and the increase of “one size fits all” marketing. Loyalty’s influence on consumer spend is decreasing as consumers tire of standard loyalty programs. 

The #1 consumer priority for retailers over the next 5 years is loyalty and retention. 

 4. Frictionless Retail for the Impatient Consumer 

Another thing Covid taught consumers is that they have standards and are allowed to have expectations. That means they want what they want, when they want it, and how they want it!  

Inefficient retail interactions waste time and have given rise to frictionless checkouts and innovative subscription services that show retailers understand how precious a consumer’s time is. 

1 in 5 Australian consumers now have a retail subscription. Voice-based shopping sales are projected to reach AUD $4.4 billion and account for more than 1% of all retail sales in Australia. 

 5. Experience-Driven AR & VR Shopping 

AR and VR technologies are no longer just futuristic concepts; they are becoming integral to the retail experience. They enable retailers to create immersive in-store and online experiences, transforming how customers engage with products. 

The Virtual Reality market is forecasted to grow at a compound annual growth rate (CAGR) of 19% from 2021 to 2027, with the AR and VR technology spending expected to reach $72.8 billion in 2024​. 

 6. Hyper Personalisation & Hybrid Lifestyles 

As remote work is now a staple of the office environment, Australian consumers are increasingly seeking a lifestyle that accommodates a blend of work and leisure activities, known as ‘Hybrid Lifestyles’. 

The trend towards Hybrid Lifestyles is driven by a desire for balance and the integration of work into a flexible, health-conscious lifestyle. The need to prioritise self care, happiness and time spent wisely in 2024 eclipses the ‘Time as a Currency’ trend that marked 2023. 

34% of Australian workers engage in hybrid work, surpassing the global average of 29%.  84% of Australians prioritise health and wellbeing. 

 7. Community Inclusion & Engagement 

As consumer confidence declines, they’re increasingly looking for retailers they can trust and rely on. Expected to become a significant trend due to the increasing consumer desire for human experiences and connections with brands, community engagement will build loyal customers that look beyond the transaction. 

This will likely be further driven by the need for brands to align with values and social concerns of their consumers, forcing brands to differentiate themselves like never before. 

 8. Conscious Consumerism 

With a significant focus on ethical practices and corporate social responsibility, this trend places an emphasis on Cultural Diversity and Inclusion. As part of this, 46% of Australian consumers use their impact on the planet in their decision-making habits. 

Conscious Consumerism is a reflection of the modern shopper’s values, where ethical considerations and social impact are decisive factors in purchasing decisions. Over 75% of Gen Z consumers are willing to end relationships with companies that run ad campaigns perceived as insensitive or exclusionary.  

 9. Unified Commerce – Marketplaces in the Retail Space 

Unified commerce is transforming Australian retail, currently valued at AUD $44 billion. Early adopters in 2022 saw a 7% revenue boost, with a potential $30 billion industry growth if more retailers embrace unified commerce in 2024 and beyond. 

Over 68% of Australian businesses are investing in unified commerce systems, or are considering it to maintain a competitive edge. Unified commerce is set to trend in 2024, offering a seamless customer experience across all channels. These benefits include: 

• consolidating inventory, customer, and payment views. 
• allowing retailers to anticipate and exceed customer expectations. 

Customers shop the brand, not the channel, so retailers need to follow suit, potentially opening doors to marketplaces they could not access before. 

 10. Increased Investments in Retail Media 

The trend towards retail media is being driven by the shift in consumer behaviour towards on-demand services, the richness of first-party data available to retailers, and the growing need for brands to find alternative advertising channels in the face of declining traditional media effectiveness and the phase-out of third-party cookies​​​​.  

Retail Media has seen a significant increase in retailer consideration in recent months. The spend is justified by increased revenue streams from brand advertisements that target specific groups of consumers, thereby improving customer experiences. 

Retail media is estimated to generate an additional $1 billion in revenue for Australian retailers. 

11. AI & Data Analytics 

Artificial Intelligence (AI) and Data Analytics technology enables retailers to create personalized shopping experiences, streamline supply chain operations, and implement dynamic pricing strategies to stay competitive.  

According to Shopify’s Australian Retail Report for 2023, 44% of Australian retailers plan to invest in AI and automation in the following year, while 27% of retail leaders acknowledge its critical role in growth. 

12. Robotic Assistance 

Robotic assistance is trending in 2024 due to its potential to address labour shortages, enhance worker productivity and safety, and improve the customer experience.  

The Robotics market in Australia is expected to reach a revenue of US$691.50 million by 2023, with Service robotics anticipated to dominate this segment​​. Additionally, the AI Service Robotics market is projected to reach US$130.70 million in 2023, with an expected annual growth rate of 15.78% from 2023 to 2030​​.  

The integration of AI and IoT in robotics is revolutionising how retail businesses operate, offering new insights into customer behaviour and inventory management. 

13. Digital Dependency 

As of early 2023, Australia recorded an internet penetration of 96.2%. Consumers are increasingly coming to rely more and more on digital technologies for their shopping needs. This encompasses online shopping, contactless payments, and augmented reality, which enhance the customer experience and streamline the purchasing process. 

90% of consumers do their own pre-research before committing to a purchase and use search engines extensively to help them make the final decision. 91% of 25-to-34-year-olds use social media to interact with retailers.  

Pivotal for the retail sector, Digital Dependency is set to continue as a trend in 2024, aligning with consumer expectations for convenience, efficiency, and enhanced shopping experiences.  

The #1 strategic priority for retailers globally is accelerating the use of digital technologies in their business models. 

14. Value-Driven Consumerism 

43% of consumers say they are now more conscious of their budget than ever before, but this does not necessarily mean they’re looking for the lowest prices. Rather, consumers are looking for value and what they will get out of the purchase.  

Consumer confidence is at a low, coupled with increased interest rates and cost of living. Consumers are more considerate in their purchases, resulting in a resurgence of the Covid-times “Shoptimism” trend where consumers purchase low-priced, high-value products to feel good.  

Increasingly, over 90% of all consumers are also researching more, hesitating more,  before making their purchase. Aspects such as trust in the brand and the in-store experience carries more value for the consumer. Purchases made are out of necessity but also to fulfil other value-based emotional needs.  

Brands and retailers alike will need to use a combination of consumer insights and business analysis, together with an understanding of what their unique value proposition is to determine where their strengths lie. 

Frequently Asked Questions 

Q1: How do I use the trend predictions in my own business? 

A: Partner with an advisory group that understands your business needs and the landscapes you operate in.  

Q2: How do I invest in AI and automation to grow my business? 

A: Automation and the use of AI tools in business are a trend with exponential growth opportunities. Begin by identifying the areas of your business where AI will have the biggest impact. This includes time-consuming or expensive tasks that could be automated, using data-driven insights to target different market demographics, or using technology to hyper-personalise offerings to your consumers. 

Q3: There is so much to do to get Business Fit! Where do I start? 

A: Start small. Create goals. Devise a long-term growth plan. Once you have an idea of what direction your business will move in, you’ll be better able to see the areas that need improvement and can see what will work best for your business and budget.

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The Retail Doctor Group is a retail advisory and consulting practice that builds retail channels and increases the performance of retail and FMCG businesses through our customised & transformative ‘Business Fitness™’ methodologies. 

Since 2005 we have partnered with our clients to build powerful, award winning, sustainable, and “fit” implemented retail. Ensuring our clients consistently achieve above benchmarks, build sales and margin results. We stay with our clients to ensure success. 

As the Australian elected member of International Retail Experts, Ebeltoft Group, we have more than 20 years of experience as retailers and consultants in all retail channels, segments and regions. Today, members of the Ebeltoft network advise 80 of the 100 largest retail companies in the world. 

Want to know more about the Future of Retail and prepare your retail strategies? Schedule an appointment with our Insights division by e-mailing us at businessfitness@retaildoctor.com.au or calling 02 9460 2882.