The retail sector comprises a broad range of market segments, from large national grocery chains, through to small boutiques and eCommerce-driven business models.
Regardless of model, the sector is increasingly impacted by increasing digitisation of customer behaviour and expectations (a shift which was further accelerated by the Covid pandemic and restrictions on personal movement). Digitisation is also enabling increased personalisation of the retail experience, with those retailers best able to leverage big data well-positioned to offer customised product recommendations, loyalty programs and tailored customer experiences.
Sustainability is another important market trend. Customers are increasingly aware of sustainability and ethical consumption issues, with the resulting requirement for retailers to increase the transparency of their approach to sourcing and ESG policies.
Supply chains remain a critical enabler for retailers and wholesalers, with a long-term trend towards increasing centralisation of supply chains around large DCs. For large-scale retailers and wholesalers, this approach promotes good inventory availability, as well as increased scope for international sourcing of high-margin own-brand products.
The Australian retail market is currently experiencing higher rates of insolvency and consolidation, as households find their disposable income squeezed by a combination of higher rates, rising taxes and inflation. This creates some opportunities for larger players to acquire smaller competitors to expand their market share and capabilities.
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