The Australian Retail Report
Trends and insights shaping the industry
10,000 businesses, from 23 markets
Then we asked 40,000 consumers from 26 markets, including 2,000 from Australia if they’re getting it right.
Welcome to the Australian Retail Report 2022:
The shape of ambition
When faced with sudden and significant change, we are compelled to examine our hopes, fears, and ambitions in a new light.
While 2020 was certainly a challenging year and introduced a lot of change, 2021 was the year the pandemic really impacted the Australian way of life. Various lockdowns, state border closures and trading restrictions forced everyone to adapt.
Yet, despite the strangeness and hardship, many have been able to innovate and thrive, showing incredible positivity and resilience. Ecommerce boomed and click and collect became commonplace. Restaurants, cafes and take-aways found ways to serve their customers and keep sales going.
As a result, 63% of businesses across the retail, food and beverage, and hospitality sectors grew in revenue by 20% or more in 2021. Digital transformation has played a pivotal role. In the face of enormous pressure and uncertainty, many businesses have chosen innovation.
Having adjusted through this turbulent period, businesses are now ready for the next phase and setting ambitions for what lies ahead.
Ambition might be in the form of improving customer experience, championing sustainable practices, or expanding into new markets. One thing is very clear in this research. Businesses that embrace technology to enhance the shopping experience, reward customer loyalty and improve operations have the edge on competitors.
We hope the following insights and recommendations help you shape, grow, and realise your ambitions for 2022 and beyond, whatever they may be.
Digital transformation is a $169 billion opportunity.
In spite of – or perhaps because of – the multitude of pandemic-fuelled challenges hitting the retail, food and beverage (F&B), and hospitality sectors over the last year, businesses across Australia invested heavily in digital technologies. The goal? Improving operations and breaking down silos in backend processes and systems such as payments. 1 in 4 businesses connected payment systems to other parts of the organisation, such as inventory management and supply chain.
This proved to be the right move. 44% of respondents say their business is now in a better position due to investments to improve operations. And customers agree. 55% of consumers believe retailers used technology well to make their products available during the pandemic. No wonder 90% of businesses plan to invest further in this area in 2022.
With so much investment planned, it’s time for businesses to take a holistic view of digital transformation. Connecting operations and customer experience is key to success – not just in terms of sales, but also operational efficiency.
Our studies show that there is a 11% increase in growth amongst businesses that connect payment systems across their organisation compared to those that don’t. This is reflected in their ambitions – the growth projections for 2022 are 9% higher for those who connect their systems compared to those who do not.
Digital transformation is expected to continue opening up a wealth of opportunities. Our research found that 68% of businesses expect to grow by 20% or more in 2022. Overall, hitting these growth ambitions equates to a $169 billion opportunity – and with so many planning to invest further and grow bigger, that number could be even higher. In fact, if technological adoption is accelerated, the retail sector could add 4.6 percentage points to its growth rate over the next five years.
How does Australia compare?
Daniel Taft — Director of Operations, Kogan
From insight to action
Connecting opportunities with unified commerce
Businesses that consistently perform the best are those that can combine their physical and digital worlds to create a fluid, channel-agnostic experience, which prioritises the customer. This is unified commerce, the next level up from omnichannel sales.
Omnichannel businesses are great at delivering cohesive cross-channel experiences to their customers. But behind the scenes, backend systems are often unconnected, complicating cross-channel reconciliation, limiting the experiences businesses can offer customers, and hindering their operational agility across multiple channels and regions.
With unified commerce, payments from all channels – online, in app, and in store – feed into the same system. This gives businesses more targeted, data-driven decision making, and a more seamless, flexible experience for customers. It also keeps businesses agile since they can add new channels and support new customer journeys quickly because everything’s connected.
54% of consumers believe that retailers should deliver the same cross-channel flexibility they provided during the pandemic.
The flexible, tech-driven experiences made available mid-pandemic have blurred the line between sales channels and encouraged the rise of nonlinear customer journeys. Businesses are providing new or simply different ways to shop, from the convenience of click and collect, to the perks of brand-owned apps – and customers are loving these multi-channel experiences. The majority of consumers are more loyal to retailers who have physical stores and online options (51%).
Both businesses and consumers have a taste for what’s possible with technology – and now there’s no going back. 54% of consumers believe that retailers should deliver the same cross-channel flexibility they provided during the pandemic. Keeping up with these expectations greatly improves the likelihood of repeat purchases and higher spending. Falling short could result in the opposite: 66% of consumers will not shop with organisations that have a bad shopping experience, either online or in store.
It makes sense that linking online, in-app, and in-store payments with a single system – i.e., unified commerce – has proved to enhance both brand resilience and customer satisfaction. 47% of businesses say online stores were able to offset the losses at physical stores during the pandemic.
And the more channels shoppers use, the higher their value: 41% of businesses say a benefit of unified commerce is improved customer experience, and 42% say it helps increase sales.
This brings us to some interesting findings around loyalty programs. Only a handful of brands are making the most of them and it’s an area of the customer experience ripe for innovation. 58% of consumers feel that retailers need to improve the ways they reward them for shopping with them. Payments-linked loyalty is a good place to start, since 50% of consumers would be more likely to shop with a retailer if their loyalty programme worked automatically through their payment card.
How does Australia compare?
Nathan Alexander — CTO, R.M.Williams
From insight to action
Cross-channel recognition and payment-linked loyalty
Address customer needs in real time
Payments data enables businesses to build a picture of their customers, their purchases, and their preferences in real-time, across every channel and region. With these insights, businesses can investigate their customer segments, understand their behaviour, and shape their strategy with confidence.
Recognise and reward loyal customers
Use customer recognition to make loyalty programs more frictionless by removing the need for a traditional loyalty card or app. When customers make a payment online or in a physical store, businesses can automatically recognise them and award them with points, discounts, or a reward.
73% of Australians prefer to shop in physical stores – 14% above the global average.
They say absence makes the heart grow fonder, and Australians are feeling very fond of the physical store experience indeed. While Australians adopted new shopping experiences such as click and collect during the pandemic, they are certainly ready to return to the physical store. Almost three quarters (73%) prefer to shop in store – higher than any other market. Since the pandemic, 34% of consumers say they have a new appreciation for being able to touch, feel or physically try products in store before they buy.
On the business side, things are looking equally affectionate: 45% of businesses expect the proportion of revenue to increase from physical stores in the next year, and 39% plan to open more physical stores in the same period.
For retailers, this is about more than just stocking up shelves, throwing open the doors, and expecting the crowds to coalesce. Today, it’s about creating a destination that entices: 54% of consumers say physical stores should be exciting places to visit. Stores must offer something more than the products and services available online.
Technology proves pivotal in creating an in-store experience worth visiting. From endless aisle shopping – providing kiosks or terminals to check additional stock for home delivery – to offering new ways to pay through QR codes or mobile payment terminals. 67% of consumers say physical stores are an important touchpoint, even if they shop with the same retailer online. 48% say they like to go in store for customer service or to get help with a product they couldn’t get online and 51% are more loyal to retailers who have physical stores and online options.
But even more crucial is the ability to connect online and physical channels to ensure a truly seamless experience: 53% of consumers would be more loyal to a retailer that lets them buy things online and return in-store. Shockingly, only 21% of businesses say they currently provide this option.
Customer and staff experiences are inextricably intertwined; any technology leveraged for in-store experiences should help, not hinder, sales teams. With that said there is demand amongst Australians for new customer experiences. 25% say they would love it if in-store sales assistants used technology to assemble items from their online wish list in the changing room ready to try on. 35% of consumers say they are more loyal to retailers that use tech to improve the experience.
How does Australia compare?
Rhian Greenway — Chief Information Officer, City Beach
From insight to action
Driving in-store convenience through technology
Enhance in-person payments
Make donations easier
Make donating at the checkout easier for businesses and their customers.
Recognise your customers
Localise the checkout
Present customers with relevant languages and payment options.
24% of businesses use payments data to understand user behaviour and improve customer experience.
COVID-19 hasn’t just influenced consumer behaviour; it’s completely disoriented it. Think of the stockpiling of toilet paper and pantry staples, as well as all the one-off purchases such as kettlebells and desks, and the splurging on cooking utensils, electronics and garden supplies. The historic data businesses use to inform decision making has been compromised.
Our research shows that consumers want businesses to recognise, predict, and meet their needs in a relevant and timely way: 34% of consumers prefer retailers who remember their preferences and previous shopping behaviours to create a more tailored shopping experience. Businesses who can leverage real-time data insights instead of relying on historical data, will be best placed to deliver these more personalised, sophisticated experiences.
The insights unlocked via payments data, particularly unified payments, allow businesses to make quick, actionable decisions with what consumers are telling them. A growing number of businesses are leveraging this opportunity – but many are still missing out. 24% of businesses use payments data to understand user behaviour and improve customer experience, and 24% to build a better picture of their customers.
Those businesses who are using payments data can easily and seamlessly identify popular product lines, inform inventory management, create personalised marketing campaigns, and inform decision making – a testament to the wealth of insights made possible through payments data.
Businesses need to strike a delicate balance. Clearly, there is vast potential to use data to improve the customer experience. However, with data breaches becoming more common and an increased focus on reporting data breaches by the Office of the Australian Information Commissioner, businesses have to go the extra mile to ensure they use and store data responsibly.
45% of consumers believe retailers shouldn’t be able to use their data or purchase behaviour information unless they give express permission. And 38% of consumers will only allow data to be stored and used by retailers if there are assurances around security and privacy. Businesses need to stay informed and compliant to protect shoppers and themselves from data breaches and fraud.
How does Australia compare?
Casper Mooyman — Head of Marketing, Domino’s
From insight to action
Securing trust with smooth payment authentication
No ecommerce strategy is complete without a clear plan for Strong Customer Authentication (SCA), especially since consumers expect the process to be fast, with no action required from them. There’s no one-size-fits-all approach to applying SCA, but the right technology partner will take care of this for businesses.
Implementing authentication protocols, even when required by regulations, helps to reduce fraud – but there are additional steps businesses should take to ensure secure payments.
With the Adyen Authentication Engine, we won’t trigger 3D Secure for out-of-scope transactions or exemptions. We'll also skip 3D Secure if the issuing bank doesn’t enforce it.
A resilient industry with new ambition
Whilst resilience and adaptability have been key themes of the last few years, there is also opportunity. Digital transformation remains a key priority, accelerated by recent challenges but at the same time more within reach than ever. Consumers continue to drive innovation and flexibility, and businesses are expected to not only keep up, but continue to shape whatever comes next.
At Adyen our focus is, and always has been, on supporting long-term, sustainable growth. We’re committed to ensuring our customers remain at the forefront of this ever-evolving industry and look forward to speaking with you about how payments can be the strategic growth driver you’re looking for.
Opinium Research LLP polled 40,020 adults in Singapore, Hong Kong, Japan, Australia, UAE, the UK, France, Italy, Spain, Portugal, Germany, Poland, Belgium, the Netherlands, Brazil, Norway, Denmark, Sweden, USA, Canada, Malaysia, Mexico, Ireland, Austria, Switzerland and India. Respondents were incentivized to participate.
Censuswide polled 11,530 merchants in Singapore, Hong Kong, Japan, Australia, UAE, the UK, France, Italy, Spain, Portugal, Germany, Poland, Belgium, the Netherlands, Brazil, Norway, Denmark, Sweden, USA, Canada, Malaysia, Mexico and Ireland. Respondents were incentivised to participate.
Fieldwork was conducted between 23 December 2021 - 8 February 2022.
The sample includes minimum quotas of 100 in retail, 50 in travel and hospitality, 50 in food & beverage per market.
Opinium and Censuswide campaigns are conducted in accordance with all ESOMAR principles and best practice.
We commissioned the Centre for Economics and Business Research (Cebr) to provide analysis on the current state of retail, hospitality, and F&B businesses around the world.