ARA RETAIL
INSIGHTS REPORT

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“After a challenging year for Australian retailers, 2024 presents heightened stakes – though perhaps less tumultuous than previous ordeals… The industry’s resilience, having navigated a storm of issues last year, deserves commendation.”

As 2024 unfolds, the Australian retail industry approaches an opportunity to change the narrative.  

Recent years have served as intense preparation, with the pandemic radically altering our understanding of the sector.  

In 2023, retailers confronted harsh economic realities – a dip in discretionary spending and skyrocketing operational costs. They also battled complex government reforms and an ongoing crisis in retail crime. Additionally, the industry grappled with dramatic shifts in consumer spending habits and the swift rise of new technologies. Supply chains remained exposed to escalating geopolitical tensions and industrial action.  

After a challenging year for Australian retailers, 2024 presents heightened stakes – though perhaps less tumultuous than previous ordeals.  

The industry’s resilience, having navigated a storm of issues last year, deserves commendation.  

While cautious optimism exists for 2024, timing remains uncertain. The sector braces for another demanding year, with many of 2023’s challenges persisting well into the first half of the new year.

But there’s promising signs ahead.

Continue Reading Full Foreword by ARA CEO Paul Zahra

Despite the spending slowdown, the Australian economy shows resilience. While interest rates impact many, the country’s population growth, including newcomers unaffected by these rates, brings new spending power.  

Mid-year tax cuts are expected to boost discretionary spending. For retailers, understanding customers and targeting segments less impacted by the cost-of-living crisis is crucial.  

Retail sectors will experience varying impacts throughout 2024. Small businesses, in particular, face continued struggles with the spending slowdown and rising costs, often earning less than their employees.  

Consumer spending typically lags six months behind interest rate increases, so we expect the slowdown to linger through much of 2024.  

A key development is the Reserve Bank of Australia’s decision to limit cash rate decisions to eight annually. Interest rates influence the retail landscape, affecting everything from consumer confidence to employment rates. The RBA’s decisions in 2024 will be crucial, now impacting two months at a time, elevating their significance in shaping retail outcomes. 

These decisions affect more than homeowners. They sway consumer confidence, rental markets, business viability, and employment rates. For an industry reliant on discretionary spending, the RBA’s actions are pivotal in dictating retail sales pace.

Policy-wise, last year saw intense debates over major workplace reforms. The government introduced numerous changes to the industrial relations system, culminating with the controversial Closing Loopholes legislation. The government split this bill, fast-tracking some measures while also introducing contentious changes to labor hire and union rights.  

Retailers, especially smaller ones lacking resources, face difficulty adapting to these extensive reforms. Abrupt policy shifts without proper industry consultation can exacerbate many of the challenges the sector is facing.  

Our key recommendations to the government include boosting supply chain resilience, supporting disaster mitigation, and incentivising investments in AI and sustainability, especially for small businesses. 

With the upcoming Federal budget, we advocate for measures promoting innovation and collaboration between government and industry.  

Integrating technology is a priority for retailers in 2024, but their capacity is strained by the ongoing crises.  

Sustainability will also continue to be a significant trend. Consumers are increasingly conscious of their environmental impact. Businesses that adopt eco-friendly packaging, sustainable sourcing, and carbon-neutral shipping will not only contribute positively to the planet but also to their brand loyalty and customer base.  

The past year’s challenges have tested and reinforced the industry’s ability to evolve. As 2023 commenced, retailers had benefited from a record holiday season, providing sustenance through upcoming hardships. 

As the nation’s largest private employer, the stakes are high for both the industry and the broader economy. Retail is in the spotlight this year, with the Government and the Reserve Bank’s decisions having significant sway in the months ahead.  

Explore the Retail Insights Report

The ARA Retail Insights Report is an annual research report which showcases best-of-breed insights for the Australian retail sector and provides an overview of sector performance and outlook. This document is produced in partnership with our community of retail partners and experts.

Industry Performance

Summary

Access exclusive insights into expected retail sector performance in 2024

Consumer Trends

Summary

Access academic insights into changing consumer habits and behaviours 

Growth / Marketing

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Access the latest insights into digital marketing trends and the rise of mobile shopping 

Online / eCommerce

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Get all the data and insights you need to shape your 2024 eCommerce retail strategy

Innovation / Global

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Navigate NRF 2024 Retail’s Big Show
session wrap-ups & analysis

Small Business Insights

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While pressures continue into 2024, there are reasons for optimism for Australian retailers 

Risk (Cyber Security & Retail Crime)

Summary

The ARA Retail Crime Symposium was not just a forum for discussion; it emerged as a blueprint for change, outlining four key themes

Retail Impact, Policy & Sustainability

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Your guide to navigating sustainability in 2024

Workplace Trends, Jobs and Skills

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Explore retail as a career and strategies for encouraging workers into our sector

Industry Digital Dashboard

This digital dashboard brings together the key metrics from our industry to provide a comprehensive overview of its performance. Our goal is to enhance the use of data and help inform decision making for the retail sector. By incorporating the best available research, we aim to support the growth and stability of the industry.

$420b

value of retail economy

1.3m

Australians work in retail

$35.8b

retail spend Feb 2024 +1.6% YoY

9.52m

households received a parcel in 2023 +1.4% YoY

83.1

consumer confidence February 2024 -0.9pts from January 2024

3.4%

monthly CPI indicator rose 3.4% in the 12 months to January 2024

37,200

vacancies across the retail sector in November 2023 -3.8%

~40%

retail trade covered by net-zero commitments

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