Retail cause for optimising after a tough 2024
Retail cause for optimising after a tough 2024
After a challenging year, retailers are finding reasons to be optimistic about what 2025 may bring. BDO National Leader of Retail, Salim Biskri, said that while 2024 began with a positive outlook, expectations quickly tempered.
“Entering 2024, there was a sense of confidence in the retail sector. Inflation and interest rates were forecast to fall, freight challenges were easing, and consumers started the year with optimism, hoping that improvements in the macroeconomic and political environment would boost confidence,” he said.
“However, optimism began to fade in the second half of the year. With no reduction in interest rates and high inflation continuing to affect the cost of living, discretionary spending took a hit.” Despite these challenges, Salim sees multiple reasons for hope in 2025.
“Banks and economists are currently forecasting first interest rate reduction in the second half of 2025 as the RBA is in no rush to decrease them until there are two quarters of low inflation before considering reducing the rates. The upcoming Federal election may also impact confidence and consumer spending.
“Forecast of some relief for renters with slower net migration and a boost in rental supply might result in a slowdown in rent growth forecasted which could positively impact cash savings and discretionary spending.”
However, taking advantage of potential economic relief will require retailers to remain flexible.
“Even with lower interest rates, many consumers will still be facing cost-of-living pressures. Retailers will need to stay focused on offering affordable options, such as discounts and budget-friendly products, to meet ongoing demand for value” Salim said.
“Strategies like enhancing loyalty programs, offering second-hand products, and introducing flexible payment plans will be key to staying competitive.”
Salim also highlighted the increasing importance of technology and sustainability in the retail landscape.
“AI will play a central role in shaping the future of online shopping. Retailers will need to leverage AI to enhance the customer experience, offering personalised product recommendations and improving customer service to build stronger relationships with shoppers.”
“Finally, sustainability will continue to be a critical factor for retail success in 2025.
“Consumers are increasingly demanding environmentally responsible products and services.
“Retailers that prioritise sustainability—whether through ‘take back’ programs, repair services, or trade-in options—are likely to gain a competitive edge as we move into the new year.”
For media enquiries:
Tate Papworth
Manager, Media
E: tate.papworth@bdo.com.au
Ph: 0433 411 189