Navigating growth: The common pitfalls of fast-growing retailers

In the world of retail, spending growth is closely monitored and identified as a key performance indicator - particularly in high-volume, low-value consumer environments. In 2024, eCommerce represented 39 per cent of spend growth in Australia which translated to $16 billion and a 12 per cent year-on-year increase, according to the Australia Post eCommerce Report 2025.

However, rapid growth in retail doesn’t always equate to success.

At BDO, the retail team works alongside a diverse range of Australian and international retail clients, supporting them in their growth journey across multiple segments, including fashion and fast-moving consumer goods. Our extensive experience uncovers the common challenges and risks faced by fast-growing retailers.

Navigating common pitfalls for fast-growing retailers:

1. Scalable technology

Many retailers outgrow point-of-sales (POS), inventory and CRM systems as they try to scale up. It is important for retailers to consider and factor in technology that can keep up with a growing business. Scalable technology for retailers should focus on solutions that grow with business needs, ensuring efficiency, flexibility and long-term viability such as cloud-based POS systems, mobile and contactless payment solutions and scalable cybersecurity.

2. Cash flow crunch

Growth requires investment in inventory, people, technology, and channel presence. Retailers often face the challenge of cash flow crunch particularly when inventory, rent and payroll costs pile up while sales fluctuate. Without accurate forecasting and cost controls, even profitable businesses can find themselves cash-poor at critical moments. Obtaining fast access to working capital financing with a facility large enough to ride the inherent seasonality experienced by retailers is key to managing cash needs.

3. Competing for top talent

The pace of the retail job market is rapid and constantly evolving. Fast growth often means hiring quickly and sometimes reactively. Operations must focus on leadership to navigate the challenges of a constantly changing environment. Without the right leadership, retail operations can suffer from inconsistent customer experience, high staff turnover, and strategic misalignment. Shortages have made it harder to hire and retain talent for less established retailers. Creating a strategic hiring and retention plan is fundamental to staying ahead in talent combat. Attracting the right talent requires brand awareness and the use of specialist recruiters, combined with an inspiring interview and onboarding process. Talent retention should include pathways for career progression, development programs for managers, Employee Incentive Programs and an emphasis on developing and maintaining a positive work environment.

4. Margin erosion

Growing retailers face a range of pressures, including expanding product lines and inconsistent pricing strategies that can lead to margin erosion. Growing retailers don’t have sufficient price elasticity of demand to react to economic pressures like rising inflation, shipping costs, duties and tariffs in the same way established brands can. Offering aggressive discounts to generate better volumes is fraught with danger, risking brand credence and raising customer dependency on future discounts. This Harvard Business Review article suggests that factors such as a shorter discount duration and lower discount depth have a stronger effect on consumers’ purchase intentions.

5. Digitisation race

The future of retail lies in physical stores enhanced by digital innovations. Scenario modelling, payment technology, and social and influencer marketing are all areas where digitisation can enhance a retailer’s value proposition. According to Australian eCommerce and online shopping statistics, it’s forecasted that there will be roughly 23.14 million online shoppers by 2029—a 96.43 per cent increase between 2029 and 2020. It is essential for retailers to balance digital strategies and physical operations to ensure a seamless customer experience.

6. The hidden costs of influencer marketing

IZEA’s Australia Trust in Influencer Marketing found that 46 per cent of Australians have purchased a product after seeing an influencer promote it, and 59 per cent say they’re more likely to trust an influencer over a celebrity. The hasty use of influencers in fast-growth retailers raises questions surrounding employment tax obligations, including PAYG withholding, superannuation and payroll tax. Retailers need to consider their obligations early to avoid penalties down the road.

7. Financial reporting responsibilities

Fast-growing retailers often encounter numerous financial reporting obligations to ensure compliance, track performance, and manage cash flow effectively. These obligations include the preparation of financial statements, tax filing and other regulatory requirements.

How BDO can help

BDO has a team of experts in the retail sector working alongside a broad range of well-known Australian and international clients. Despite these uncertain times, opportunities to optimise your retail business are plentiful. If you are scaling your retail business our retail experts are here to help. Contact us.