In the Inside Retail Australian Retail Outlook 2023 Powered by KPMG, we asked retailers about current trading conditions, top business priorities and key challenges and opportunities in the year ahead.
KPMG’s Senior Economist discusses the economic headwinds likely to reset the bar in 2023 and KPMG’s Retail Executives unpack the future of e-commerce, redefining an integrated customer experience, investing in protection of your data & recalibrating supply chains to be resilient and adaptable.
Many retailers will be quite happy to put 2022 in the past. What are they planning for in 2023? Our Australian Retail Outlook 2023 survey of retail executives surfaced some interesting findings.
What does retail look like in 2023?
Biggest challenges facing
retailers in 2023
56.34%
say consumer confidence
43.66%
say staffing
30.99%
say global economic factors
Top priorities for your
business in 2023
45.07%
say increasing margin
39.44%
say retaining staff
38.03%
say increasing turnover
Where will consumer expectations
increase the most in 2023?
58%
say price
44%
say customer service
38%
say online delivery speed
Four areas of focus for Australian retailers
It’s all just commerce now
The line between commerce and ecommerce is becoming increasingly blurred; where ecommerce was once seen as a supplementary method of retail, it is now considered essential for every retailer. Online sales now represent around 20 percent share total of Australia’s total retail sales and we are seeing the role of ecommerce in a number of distinct parts of the journey, as motivations to shop online have moved far beyond convenience alone:
- Awareness: online channels are being leveraged by retailers to create awareness of their products and services to a broad range of customers. A retail website is no longer the be-all and end-all of ecommerce; it is now simply the first stage of a customer’s shopping journey and retailers are increasingly accepting human-centred ecommerce as an integral component of retail’s future.
- Education: retailers are using online channels to provide information to customers about the products and services they offer, including ESG objectives and sustainability aspects as well as their point of difference over competitors’ and more.
- Sales: mobile and social commerce continues to explode especially as Gen Z become young adults with their own spending power.
- Customer service: online is often a buyer’s first point of contact with a brand, which enables retailers to provide customers with the same level of attentiveness and support online as they would receive instore, which is integral in driving sales and retaining customers.
Define a winning integrated customer experience
In 2023 and beyond, retailers will see an increasing convergence of physical and digital retail, wherein the physical cannot exist without the digital. Retail technology such as predictive analytics and improved ecommerce will increasingly be used to drive traffic, stimulate purchase and emulate instore interactions at every stage of the online customer journey.
Three ways retailers can find success in ecommerce, shopper technology and predictive analysis measures:
- Continually collect and aggregate transactional, contextual, behavioural and motivational retail consumer data.
- Detect and understand the significance of behaviours in real time to determine the best response.
- Deliver a relevant message to the consumer via a medium that suits their preferences and circumstances.
Data protection should be on everyone’s radar
Cyber security is an increasing concern for businesses across all sectors – it’s imperative that retailers invest in mitigating cyber risk, increasing cyber risk awareness and improving digital trust. Cyber risk management not only helps retailers avoid the costs and damage of a cyber attack, but it also builds customer trust in the brand and keeps consumers engaged.
Retailers are keeping these three things top of mind as they respond to both the risks and opportunities that exists:
- Harness their greatest asset, their people, by investing in employee training in retail cyber security and improving awareness of cyber risk across the business.
- Learn from the recent past to avoid repeating history – this involves implementing multi-factor authentication, updating existing security systems and regularly testing them, identifying vulnerabilities and backing up critical data.
- Know how to respond in case of a cyber attack; immediate action and clear communication can keep a cyber attack from going from bad to worse – ensure all employees know the course of action to take in the event of an attack and have contingency plans in place.
De-risking the supply chain
Experts forecast less turbulent supply chain operations in 2023 as compared to 2022; however, local supply chains are still set to experience disruption in the coming year. Retailers are urged to begin building supply chain resilience as soon as possible to provide a competitive advantage and boost profitability.
Some de-risking actions retailers can take include:
- Understanding in real time how your supply chain is performing and where potential disruptions lie; this will aid in getting ahead of issues before they arise and can be achieved with the help of digital tools with predictive AI capabilities.
- Using digital technologies to support value-producing opportunities such as enabling flexible delivery.
- Creating micro supply chains that are adaptable and can more easily meet customer demands.
What retail CEOs are saying about the future
-
"The biggest key investment area for retail is digital technology – from online shopping and delivery to inventory management and better design processes, technology has enabled us to connect more closely to our Kmart customers.”
John Gualtieri
CEO
Kmart -
“We see sustainability, circularity and DIB (Diversity, Inclusion and Belonging) as big areas of opportunity and investment over the next 2-5 years… we all have a responsibility to make genuine and lasting change.”
Erica Berchtold
CEO
The Iconic -
“Keeping costs down and offering great value for money should be the priority. Retailers should prioritise investments that drive value and differentiate themselves to the customer.”
Angus McKay
CEO
7 Eleven -
“How do we all regain the ground we made during Covid-19 in the online space? Brand Collective were fairly advanced… now we are considering how we continue to make improvements in this space.”
Eric Morris
CEO
Brand Collective -
"Truly understanding the customer through data is undoubtedly the big investment area for retail… Data has traditionally been maintained within marketing teams but we are shaking this up, bringing customer data to the forefront of our digital communications and interactions in stores.”
Daniel Bracken
CEO
Michael Hill
Get in touch
KPMG Australia’s Retail group offers audit, tax and advisory services geared to the unique needs of the retailing industry.
Be it grocery, fashion or homewares, we help our clients deal with a range of key issues including supply chain efficiencies,
digital transformation, cyber security and trust, customer segmentation, customer experience design and more.
We welcome the opportunity to discuss this report with you further.
