Retail in Focus: The trends and challenges facing Australian retailers in 2025

The Digital, Marketing & eComm in Focus 2025 study highlights the ongoing evolution occurring across organisations in Australia, and this year, for the first time, we’ve gone deeper, spotlighting the retail sector in its own dedicated mini report. 

The Australian retail landscape is experiencing a host of challenges and is undergoing unprecedented change. Retailers are navigating economic headwinds, rapidly shifting consumer expectations, and intensifying competition from global giants like Amazon and Temu. Add to this the AI revolution, which will rapidly reshape how consumers shop, and you have the perfect storm. At the same time, there’s a growing recognition that short-term performance tactics aren’t enough to weather the storm. Retailers need to invest in their future, but progress is uneven, and maturity gaps are widening. 

Where are brands focused, where are they falling behind, and what does it mean for the year ahead? 

Strategic priorities and budget pressure: performance is non-negotiable, but loyalty and data are critical plays 

For retailers, 2025 is all about driving growth in a tough market. 

75% of retail marketing and retail digital leaders say growth is their top priority. But in a sign of the times, they’re increasingly turning to loyalty programs and first-party data to get there. 

• 56% of retailers are focused on loyalty strategy & evolution 

• Whilst 52% are prioritising building their customer data strategy and activating data 

As the cost of digital acquisition continues to rise, and global competitors continue to win share over local retail incumbents, retailers know loyalty strategy is more important than ever before as a key growth strategy. But delivering on these strategies isn’t without friction. Many brands are facing real resource and budget constraints and lack the material foundational capability to get there.  

78% of retail leaders report flat or declining marketing and digital budgets year-on-year - a higher rate than we’ve seen across all industries in the Australian market.  

Whilst only 18% of retailers state they are advancing their maturity in the build of a unified view of the customer - a critical foundation to power these endeavours.  

CX and Personalisation: Investment is strong, but capability still lags 

Customer experience (CX) is firmly on the agenda in 2025. 

85% of retail leaders view CX as important or very important to their strategy over the next 12 – 24 months, and 49% plan to increase their investment in CX over the next 12–18 months. 

But capability is lagging: 

• Only 40% say their organisation has a clear aligned CX vision across the business 

• Just 47% measure CX as part of their key performance indicators 

• 64% rate their CX maturity as “emerging” at best 

This disconnect is a recurring theme: ambition is high, but execution and alignment are weak. 

Half of all retail brands still aren’t working cross-functionally to deliver CX, only a third have a robust voice-of-customer (VoC) program in place, and accountability for CX remains fragmented in many businesses. 

Personalisation is also struggling to mature. 

While 88% say personalisation is strategically important, over half of retailers believe they are lagging the market in this space. Only 1.6% feel they are leading or exceeding expectations. 

So, what’s holding them back? 

• Siloed teams 

• Fragmented technology stacks 

• A tendency to take an inside-out approach rather than focusing on what customers really value 

Without breaking down internal barriers, moving beyond basic tactics, and embedding CX into performance metrics which cascade through the organisation, most retailers will struggle to build meaningful differentiation through CX. 

Data, analytics & privacy: The data ambition gap persists 

Retail brands are heavily invested in building their first-party data strategies, but their ability to activate that data remains limited. 

• 82% of retailers rate their ability to activate data as “emerging” at best. 

• 84% say their unified view of the customer is emerging at best from a maturity point of view 

• 50% believe their capability in predictive analytics is nascent. 

Data ambition is strong, but capability, governance, and cross-team alignment remain barriers to realising its full potential. And this won’t just impact their ability to deliver on personalisation and experience ambitions, it will hamper future efforts in generative AI – as models and output are only as robust as the data that is fed in.  

Privacy readiness is also falling short. 

• 60% of retail leaders have made little to no progress adapting to upcoming privacy legislation. 

• Just 30% believe their teams truly understand the changes coming under the revised Privacy Act. 

The clock is ticking on privacy reform, yet many brands are still in early planning stages - a dangerous position as consumer expectations around consent and data transparency continue to rise. 

Retailers must accelerate their efforts to comply with current and future privacy regulation and invest more heavily in their data capability to compete with global players and close the ambition-execution gap. 

MarTech: Stacks are growing, but utilisation is low 

Despite ongoing investment, MarTech utilisation remains low in retail. 

• Only 23% of retailers say their MarTech is well utilised. 

• More than half (51%) feel under pressure to prove MarTech ROI. 

The challenge isn’t just stack size. It’s adoption, integration, and return on investment. 

Many retailers are struggling with legacy systems, fragmented processes, and under-resourced teams that can’t fully embed new platforms. 

Interestingly, retailers are increasingly leaning toward best-of-breed solutions (70%) rather than single-vendor stacks, a move driven by the need for flexibility and tighter alignment with customer experience goals. 

When it comes to MarTech investment priorities: 

• Customer Data Platforms (CDPs) top the list, with 54% of retailers planning to invest in the next 12–18 months. 

• Marketing automation and CRM also remain high on the agenda. 

Retailers are showing slower adoption of AI tools compared to the broader market, which is a potential risk as AI rapidly reshapes commerce and customer expectations. 

Retailers need to “sweat the stack” - driving stronger adoption, embedding platforms into workflows, and focusing on utilisation over expansion. 

eCommerce: Priorities are shifting from expansion to profitability 

Retailers are recalibrating their eCommerce strategies in 2025. 

Improving the end-to-end eCommerce experience remains a top priority (68%), but there’s a noticeable shift toward profitability, up nine percentage points year-on-year as retailers respond to margin pressures and rising fulfilment costs. Whilst 43% of retailers now rank improving profitability as a key eCommerce priority, which is up 9% YOY, demonstrating the increasing margin pressure retailers are facing. 

eCommerce channel proliferation is also real, creating new dynamic challenges for retailers. 

The majority of retailers now manage between 3–5 eCommerce platforms or channels, with the average retail brand now managing 3.7. 

Marketplaces like Amazon are playing a growing role in eComm channel strategy (35%), alongside social commerce (30%) and quick commerce (22%). 

Conversational commerce (11%) is also emerging as a growth area, particularly as AI-powered chatbots and messaging platforms mature. 

Retailers must balance growth and profitability across a growing number of channels, ensuring their operational models and fulfilment capabilities can scale efficiently. Equally, retailers must master the art of engaging effectively across a broader array of eCommerce channels that are fit for purpose based on the different customer missions occurring via emerging eCommerce channels. 

 Content operations: The hidden friction in omnichannel success 

As channel proliferation accelerates, so does the demand for channel-ready content. But many retailers are struggling to keep up. 

• Only 17% of retail leaders say they are effectively leveraging AI to optimise digital content creation. 

• Just 34% say their teams find content management and distribution fast and painless. 

• Only 42% believe their current product and service content is truly ready to support an omnichannel eCommerce strategy. 

Content is still a major bottleneck. Many teams rely on manual processes and disconnected systems that can’t scale with the demands of marketplaces, social platforms, and emerging commerce channels. 

Content operations need to mature quickly. Retailers must invest in content governance, AI-driven content workflows, and scalable processes that can keep pace with multichannel complexity. 

Retailers are at a strategic crossroads 

The Retail Findings from the Digital, Marketing & eComm in Focus 2025 report paints a clear picture: Australian retailers are balancing competing pressures - short-term growth, long-term capability building, and a rapidly evolving consumer and technology landscape. 

The ambition is there. Investment is occurring within certain initiatives. But across CX, data, MarTech, and content, maturity gaps persist. 

Retailers that can embed cross-functional collaboration, accelerate capability build, and operationalise their tech and data investments will pull ahead in 2025. 

Those that can’t risk falling further behind as competition intensifies and consumer expectations continue to rise. 

Download the full retail report here.