Retail spending is growing. Here's what it means for you

As retailers head into the winter, there are encouraging signs of growth. Consumer confidence is relatively steady at 92.6¹ and retail spend is increasing², year on year.

“There’s slightly more bounce in consumer confidence,” confirms retail strategist Brian Walker of The Retail Doctor.

Fleur Brown of the Australian Retailers Association agrees. “Consumer confidence is nudging in the right direction.”

However, both experts agree that business confidence is fragile and that ongoing international volatility, along with cost-of-living pressures, is holding back growth.

Some industries are growing faster than others. “There is a real struggle for mid-market discretionary spend, particularly in fashion,” says Walker. “This is a time for retailers to be very focused on the detail of their business.”

On the positive side, many businesses are investing in artificial intelligence technology that will ultimately drive performance, says Brown. “There are a lot of teams having a lot of fun exploring different ways of doing things.”

Numbers to know in retail

10% is the tariff imposed on Australian businesses selling to the US³

Around 12,000 businesses will be impacted by the tariffs introduced by US president Donald Trump, according to The Guardian.

However, all Australian businesses are likely to feel the effects in some form. “The US trade wars are creating a confidence issue,” says Brown. “It’s bringing about volatility in the market.”

$10.5b is the projected spend for EOFY sales⁴ 

Spending on mid-year sales is projected to be 3.9% up on 2024’s revenue, according to annual research from the ARA and Roy Morgan. In-store shopping is predicted to perform especially well.

50% of Australians view the quality of private-label brands as comparable to other brands⁵

In Australia, private-label share is growing faster than branded goods. Australians also consume more private label products than in the US.

3.5% increase to the minimum wage starts from July 1

Millions of Australian workers will get a 3.5 per cent pay rise from July 1⁶, after the Fair Work Commission increased the national minimum wage to $24.95 an hour or $948 per week (for a full-time, 38-hour week).

Recent retail innovations

Experiential spaces

Retailers are increasingly offering rich experiences to engage customers. Take Sydney’s new Fujifilm store, which includes a new studio space that can be hired by photographers for as little as two hours, as well as a new print room and personalisation kiosks. In downtown Auckland, manuka honey brand Comvita has launched a multi-sensory “wellness lab”, where customers can experience guided honey tastings in a 180-degree theatre.   

Fast delivery

Shoppers’ appetite for speedy delivery is only increasing. In Australia, a range of brands from Bunnings to Big W and many fashion retailers now offer same-day and two-hour delivery. And in the US, a new wave of partnerships between discount stores like Family Dollar and Uber suggest that same-day delivery is only set to become more expected by customers, across every category and price point. 

AI recruitment

Growing numbers of Australian retailers are turning to artificial intelligence to interview candidates, evaluate skills and deliver insights. David Jones, Big W, Qantas, Woolworths and Starbucks are just some of the brands using Australian AI tool Sapia.ai to recruit new staff.

Boomer brands

A new wave of brands is offering a more aspirational take on products and services traditionally aimed at Boomers. In New Zealand, audiology business Resonate operates a string of modern “studios” where customers can access “hearing healthcare” (hearing aids) in stylish surroundings. In the US, Caddis is on a mission to make reading glasses - usually reserved for those 40+ - cool.  

Robots

Some Australian supermarkets and stores are introducing robots to handle manual tasks. Woolworths has begun experimenting with robots collecting discarded trolleys, while both Woolworths and Coles have deployed an AI-powered floor-scrubber, the X4 ROVR. Meanwhile, KMart now uses an inventory-tracking robot known as TORY to navigate store aisles to scan and monitor stock levels. 

The takeaway for businesses? The retail sector is growing but remains vulnerable to international volatility and cost-of-living pressures. Fast delivery and technology (especially AI) are becoming increasingly important, and retailers must stay focused on delivering value and experiences that will keep shoppers engaged. 

^{Sources: 1: Trading Economics 2:  Australian Bureau of Statistics 2:  The Guardian 4:  Roy Morgan 5:  NielsenIQ 6: Fair Work Ombudsman}