Australian retailers urged to rethink stores amid eCommerce surge

Australian retailers are being urged to reimagine the role of their physical stores as a core part of their competitive strategy in response to the growth of global eCommerce giants, according to a new report from Publicis Sapient.

Omni-channel challenge

The report, entitled Retail at a Crossroads: The Imperative for Digital Transformation, highlights the ongoing shift towards online sales while noting that the majority of purchases still occur in-store. However, discrepancies between online and in-store experiences remain a significant concern for consumers.

Publicis Sapient's findings show that 76% of shoppers notice differences in stock availability between online and physical locations. The study also found that 80% of customers struggle to locate products in-store even when they are officially in stock.

The report underscores that 67% of consumers use their mobile phones in-store to check reviews, compare prices, or investigate stock levels. Nevertheless, 45% of respondents faced issues with poor mobile reception, impeding their ability to access digital information while shopping.

Customer expectations

Australian consumers have a growing expectation for technology-driven personalisation in their shopping experiences. According to the report, 63% of respondents look for AI-powered product recommendations, yet over a quarter (28%) are disappointed with the current lack of personalised insights, particularly about their previous purchases.

Physical stores continue to play a critical role in the retail landscape, with 81% of consumers indicating they visit shops to see, touch, and try items, particularly in categories such as fashion, furniture, and electronics. Over 44% rely on staff for expert advice and support, while 77% of respondents value immediate access to products and 39% emphasise the importance of multitasking during their visits.

Online competition

The motives for shopping online remain strong, with 83% of those surveyed citing lower prices as their main driver. Fast shipping and home delivery (79%), together with product availability and variety (75%), also rank highly as reasons for choosing eCommerce services. Flexible return policies continue to build consumer confidence in the sector.

Omni-Fusion strategy

John Costello, Managing Partner Retail and Consumer at Publicis Sapient Australia, commented on the report's findings, stating, "While online sales are growing, it is important to remember that the vast majority of purchases still happen in physical stores, demonstrating the strong advantage that traditional retailers hold in the Australian market. Market uncertainties are also putting further strain on global supply chains, widening the divide between what is available online and in-store. In order to thrive is the new reality, retailers must act now to improve their customer experience offering."

"In today's environment, traditional retailers must reimagine the in-store experience as a key driver of customer loyalty and brand differentiation. We are already seeing leading examples across Australia, including David Jones' reinvention of the department store experience. At Bourke Street, they've unveiled a completely revamped beauty floor with immersive brand zones and concierge services, while also expanding premium offerings like expert personal styling in private suites and specialist fitting and tailoring services. These enhancements are part of a broader strategy to turn physical locations into high-touch, experience-led destinations. Physical stores are not just an advantage, they are a critical competitive asset that retailers must evolve and maximise to thrive in an increasingly global and digital market," John Costello added.

The report advocates for an "Omni-Fusion" model to unify both digital and physical channels. This approach aims to create a seamless, data-driven retail experience by integrating in-store and online functions across the customer journey.

Forces shaping retail

Publicis Sapient's research identifies four key forces shaping the future of Australian retail. The first is omnichannel innovation, focused on bridging the gap between physical and digital shopping. The second is the adoption of AI and automation to enhance engagement, streamline store operations, and accelerate the fulfilment process.

Loyalty and personalisation are highlighted as crucial to moving beyond generic reward schemes towards highly tailored customer experiences that foster long-term relationships. Additionally, sustainability and supply chain transformation are highlighted, encouraging ethical sourcing, circular economy principles, and environmentally conscious logistics.