Social media-related strategies are the top lever Australian retail entrepreneurs are employing to attract and retain customers. This is according to new data from more than 13,000 owners of retail businesses on Shopify, including over 800 from Australia, exploring the priorities, challenges and opportunities that merchants are seeing ahead of the peak holiday sales season.
These strategies emerge as the current economic climate and its impact on consumer spending remain top-of-mind for retail entrepreneurs, with local retail business owners the second most concerned globally about consumer spending levels (77%) behind Spain (83%), and the most concerned about interest rates (66%). When it comes to Black Friday/Cyber Monday and the holiday season, 33% of Australian retail entrepreneurs say they are optimistic about the upcoming peak sales season compared to 35% who are less optimistic. Toys & Games merchants were found to have the most positive holiday outlook (42% optimistic) compared to other categories and are equal first when it comes to business preparedness (20% prepared) alongside Food and Beverage business owners.
But while economic challenges continue to be a concern for Australian retail entrepreneurs, the data also highlights the resilience of Australian businesses and their drive to adapt and innovate to meet the needs of today’s consumers.
Strategies for navigating the peak holiday season
According to the research, Australian retailers are focusing on several key strategies for their peak season plans:
- Expanding into new product areas (31%)
- Improving ROI on marketing spend (30%)
- Reducing operating cost (27%)
- Expanding into new sales channels (22%)
When it comes to attracting and retaining customers, social media-related strategies feature prominently:
- 70% of retail business owners said they will prioritise social media engagement for customer retention, followed by providing exclusive offers and promotions (42%) and enhancing customer service (38%).
- Organic social media content (47%) and paid advertisements on social media (32%) ranked as the top two strategies for attracting new customers, with a substantial 72% of respondents citing strategies related to social media, affiliate marketing and influencer partnerships overall.
- 63% of retail business owners said they will be leveraging social media platforms for direct sales.
Cost of living concerns continue to impact spending habits
Unsurprisingly, the rising cost of living and inflationary pressures continue to be the driving factors behind consumer habits, which is a key concern for merchants:
- 44% of Aussie retail business owners have noticed an interest in discounts and 43% have noticed an increase in price sensitivity.
- Over half (51%) of retail entrepreneurs have noticed a decrease in discretionary spending, 50% cited a decrease in frequency of spend and 36% noted a decrease in average order value.
- The top concerns cited by Australian business owners are consumer spending levels (77%), inflation (76%) and local economic conditions (71%).
As a result, merchants are revisiting their pricing strategies, targeting new audiences, and introducing compelling new offers to remain competitive:
- 48% of business owners said that due to changing consumer behaviour, they are adjusting pricing strategies to remain competitive, while 46% are increasing promotional activities to boost sales.
- 37% of retail entrepreneurs are investing more in digital marketing to reach broader audiences
- 28% of retail business owners are shifting focus to more cost-effective products
- 24% are redesigning their marketing messages to emphasise value and affordability.
Optimism in technology sparks AI utilisation
Businesses are also continuing to strive to create efficiencies within their operations in the lead-up to the peak sales period, which is sparking an uptick in AI use:
- Over half (53%) reported using AI to generate content, from product descriptions to blogs and social media captions, with Health & Beauty and Food & Beverage retailers reigning as the top industries to use AI for this function (both 59%).
- AI is being used to enhance product imagery (37%) such as background removal, image enhancement, and virtual try-ons, most primarily by Toys & Games retailers (42%).
- AI is being used to drive marketing initiatives (35%) such as product recommendations, social advertising, campaigns, SEO, and customer targeting, most primarily by Toys & Games retailers (40%).
- A quarter of Aussie retail entrepreneurs also reported using AI to help with data analysis and insights, and 24% use AI to automate and streamline business processes.
- The top industries embracing Shopify’s AI functionality are:
- Toys & Games (31%)
- Baby & Toddler (23%)
- Arts & Entertainment (21%)
Shaun Broughton, Managing Director, APAC at Shopify comments: “As Australian entrepreneurs navigate the current economic climate ahead of the holiday season, it is crucial that they not only deepen their engagement on social media — where their customers spend significant time — but also remain agile in responding to growing price sensitivities. Investing in technologies like AI that drive greater efficiencies while reducing costs, has also emerged as a valuable strategy for improving business readiness.”
“Black Friday/Cyber Monday and the broader holiday season present a valuable opportunity for businesses to explore new initiatives and strategies that can maximise reach and help them stand out. Although venturing into new markets or adopting new technologies can be daunting, it is important to think creatively and stay forward-focused,” said Shaun.
