Australian retailers reshape strategies to tackle privacy laws

A new report from Fiverr highlights significant changes in the strategies of Australian retailers as they navigate evolving privacy regulations and economic challenges ahead of the 2024 holiday season.

The research, based on a survey of 504 consumers and 500 small-to-medium business leaders across Australia, underscores the growing impact of privacy laws and inflation on marketing and operational decisions.

One notable finding is that 24.8% of medium-sized businesses are reducing their expenditure on targeted advertising. This move is largely driven by upcoming privacy regulations which aim to align with Europe's General Data Protection Regulation (GDPR) laws. Gali Arnon, Chief Business Officer at Fiverr, commented, "The upcoming privacy regulations are really pushing businesses, especially mid-sized ones, to rethink how they approach advertising. With the rising costs and risks tied to data-driven advertising, along with the new challenges around consent management, companies are being driven to shift toward more sustainable and privacy-compliant marketing strategies."

Businesses are not merely cutting costs but are repurposing their budgets to enhance customer experience and improve operational efficiencies. Approximately 41.8% of Australian companies surveyed are investing in artificial intelligence across the customer journey, whereas 40.8% are focused on optimising logistics by offering faster shipping options. Additionally, 39.8% are turning to content creation and influencer partnerships to build direct, owned channels, aiming to reduce their reliance on traditional advertising methods.

The report also indicates a significant rise in the adoption of AI, with 68.6% of businesses integrating AI into their operations. This trend is particularly strong in the e-commerce sector, where 84.2% of companies now utilise AI for functions such as chatbots and inventory management to better meet consumer demands.

Workforce planning is another focal point for small and medium enterprises (SMEs) as they prepare for the holiday season. According to the survey, 42.8% of SME owners plan to hire full-time or part-time staff, and 40.2% will bring on seasonal employees. Furthermore, 40% of businesses are leveraging freelance talent for added flexibility, with 6.8% opting to use AI tools as an alternative to expanding their teams.

Competition from larger e-commerce brands remains a significant challenge for SMEs.

The report notes that 44.6% of surveyed SMBs are concerned about competing with financially robust giants such as Amazon, Shein, and Temu. "For SMBs, the challenge is not just how to compete, but how to outmanoeuvre competitors with far deeper pockets," stated Ms Arnon.

"It's a critical time for businesses to invest strategically, ensuring every dollar spent contributes to long-term growth and customer loyalty."

The study also reveals a shift in consumer priorities, with affordability now taking precedence over sustainability. As economic pressures mount, 50.79% of respondents prioritise good deals, and 41% value free shipping, particularly among women. Despite this trend, a segment of consumers still considers sustainability and ethical brands important, with 7.14% prioritising sustainable products and 7.74% valuing ethical brands.

The research by Fiverr, conducted in partnership with Censuswide, provides an illuminating glimpse into how Australian retailers are adapting to an increasingly complex market environment. The findings reflect a broader trend of businesses rethinking their strategies to balance compliance, operational efficiency, and consumer expectations.