Consumer confidence biggest challenge facing retailers: KPMG

More than half of Australian retailers said the biggest challenge they will face this year is consumer confidence, according to a new KPMG report. 

The Australian Retail Outlook 2023 highlighted the top challenges, priorities and consumer expectations for the year ahead.

Following consumer confidence as a challenge, staffing and global economic factors are the other two biggest trials retailers expect to face this year.

The report said the top priorities for retailers include increasing margin, retaining staff and increasing turnover.

While consumers expect a hike in price this year, they are also expecting better customer service and faster delivery speed in 2023.

Angus McKay, CEO at 7Eleven said, “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.”

Blurred lines

Retailers believe the line between bricks and mortar and online commerce are becoming increasingly blurred.

E-commerce 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, the KPMG report highlighted four ways retailers are using their online channels.

Awareness, retailers are using their online presence to showcase their products and services.

Education, brands are using their online channels to provide information to their customers about what services they offer and what they represent as a brand. For example, ESG objectives.

Sales, online channels will be used to target younger, more mobile-dependent consumers such as Gen Z.

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.

John Gualtieri, CEO, Kmart said, "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.”

Importance of cyber

The cybersecurity has never been more important, the KPMG report noted that retailers need to invest in mitigating cyber risk, increasing cyber risk awareness and improving digital trust.

The report’s authors highlight three points to keep top of mind when responding to the risks and opportunities that exist.

Invest in cybersecurity training and improve awareness of risk across the business, implementing multi-factor authentication and have a plan in place when an attack happens, ensuring all employees know what to do.

“In 2023, Australian retailers that truly understand the business advantage gained by ensuring their systems, suppliers and people are able to demonstrate how they manage cyber-risks is not only doing the right thing by their customers, but also for their bottom line,” the report said.