How retail feels about the year ahead

Retail outlook 2020

A retail outlook for 2020 shows that Australian retailers have labelled consumer confidence, rental overheads, and discounting as their top three challenges for the year ahead as the industry grapples with what could prove a “tempestuous” start to the new decade.

According to Inside Retail’s Australian Retail Outlook 2020, the sector has entered a new decade amidst tricky conditions including the impact of the bushfire crisis, a low Australian dollar and decreased consumer confidence.

“On the one hand, while some categories and retailers are thriving, others are failing and falling into obsolescence,” the report reflects.

That said, they note there are consistent opportunities for retailers ahead as many in the sector seek to meet their challenges head-on.

Here’s an insight into this year’s outlook and how Australian retailers feel at the outset of 2020.

The outlook survey

A major feature of the Australian Retail Outlook report is the annual retail survey. Compiled using feedback from 360 retailers and 250 related industry members, this year’s survey is a litmus test of the major issues the industry faces and the sentiment as it looks to the year just gone and the one ahead.

This year the survey noted 2019 proved a challenging year for retailers with an increased number finding the going tough.

  • 1 per cent noted 2019 was the best year they’d had
  • 9 per cent said trading conditions were good
  • 8 per cent said trading conditions were ordinary
  • 5 per cent indicated they were poor, and
  • 7 per cent reflected they were the worst they had experienced

Looking ahead, the majority also felt conditions were only likely to change slightly in the next 12 months.

The challenges ahead

Retail outlook 2020

When surveyed about the challenges they expected to face in 2020, most retailers (56.4 per cent) said consumer confidence was likely to be the biggest. Rental overheads placed second at 44.9 per cent and discounting rounded out the top three at 42.1 per cent.

These were followed by labour costs (30.8 per cent), global economic factors (28.9 per cent) offshore online retailers (26.7 per cent), the value of the Australian dollar (25.7 per cent), international entrants (18.9 per cent), other (9 per cent), government regulation (6.1 per cent), private label (5.7 per cent), and taxes (4.8 per cent).

And to address these challenges, retailers were focussed on the following key areas:

  • increasing margins
    (54.3 per cent)
  • increasing turnover
    (59.3 per cent)
  • e-commerce
    (44.4 per cent)
  • omnichannel initiatives
    (37.1 per cent)
  • entering new markets
    (28.9 per cent)
  • expanding product ranges
    (26.6 per cent)
  • expanding store network
    (14.3 per cent)
  • closing stores
    (8.9 per cent)
  • rebranding
    (7.8 per cent)
  • reducing product range
    (6.7 per cent)

Increased consumer expectations

Retailers also had firm views about the areas where they believed consumer expectation would increase in the coming months, with online delivery emerging as the most likely priority for customers.

Retailers noted customer expectations would increase in the following areas:

  • Online delivery speed
    42 per cent
  • Online delivery options
    35.9 per cent
  • Customer service
    34.9 per cent
  • Price – 32.5 per cent
  • Product quality
    14.7 per cent
  • Product freshness/relevance
    14.4 per cent
  • Instore digital functionality
    13.8 per cent
  • Product variety
    7.1 per cent

The key takeaway

Although the report concedes there are significant challenges for the immediate period ahead, Inside Retail notes it’s not all bad news.

“Consumers have more paths to purchasing goods than ever before, and the increased competition has forced retailers in Australia and New Zealand to up their value proposition to keep pace. The result? Exciting partnerships, launches and innovative retailing by successful local retailers that are powering ahead in the new retail landscape,” they note.

You can download the full Australian Retail Outlook 2020 at