Retail Insights Report 2025

Yet amidst these challenges, new opportunities have emerged.

Retail remains a cornerstone of the Australian economy, generating $430 billion annually and contributing 18% to GDP. The sector supports 1.4 million jobs and serves as a critical barometer of consumer confidence. The latest monthly data from the Australian Bureau of Statistics showed a modest boost in consumer spending in April 2025 to $37.2 billion, representing a 3.8% year on year increase over the same month in 2024.

A key trend of the past year was the rebound of online retail. In 2024, digital sales, which began the year growing at 3.7%, surged to 14.3% by year’s end. Enhanced logistics, faster fulfilment and the popularity of click & collect helped fuel this growth, with online now making up roughly 20% of all retail spend. Retailers have invested heavily in omnichannel strategies, AI-powered customer experiences and personalisation tools – driven by data and insights – to meet the evolving expectations of the modern shopper.

Price inflation has eased, falling from a peak of 7.8% in December 2022 to 2.4% by the end of 2024 and sitting at 2.1% at the mid-year mark for 2025. Whilst this is within target levels, ongoing pressure continues from input costs, wages and supply chains.

Structural challenges also persist. The sector still faces 25,600 job vacancies and small businesses continue to grapple with cost pressures and policy shifts, following the rollout of the largest set of industrial relations changes in decades. It’s fair to say we have hit peak regulation and much of our focus with government is on how to reduce red-tape and other growth barriers to allow a return to productivity.

Despite the cost-of-living challenges, retail performance is nudging towards growth in 2025, with monthly ABS sales data revealing slightly higher growth in the first half of 2025 than the average growth last year which sat at 2.8% overall for the 2024 calendar year. Australians also continue to show enthusiasm for seasonal events and value-driven experiences such as sales events. Back to School spending this year was up 5.9% on the previous year and EOFY and Mid-year Sales are estimated to have generated $10.5 billion, up almost 4% over 2024 numbers.

The second-hand economy is also booming, with 35% of Australians engaging in the buying or selling of pre-loved goods. Retailers are embracing this shift, using technology to enable more circular, sustainable commerce, from re-commerce platforms to AI-assisted resale marketplaces.

As we move through 2025, the retail sector is poised for growth, leveraging innovation, data and sustainability to shape a new era. The story of retail is evolving fast, and it’s one of bold transformation.