Indeed, many retailers will happily say goodbye to 2024, a period when high inflation and interest rates remained persistent and an ongoing cost-of-living crisis crushed consumer sentiment to its lowest in 45 years, all of which resulted in anaemic national year-on-year retail sales growth.

So as the going got tough, what did retailers learn? How did they adapt? How has customer behaviour changed? We talked with leading retail experts from Adore Beauty, T2, Coco Republic, Jeanswest, and 2XU about customer loyalty, seamless commerce and customer engagement when the headwinds abound.
Think about value, not price

When sales slow and a prolonged spending slump sets in, often the conventional wisdom is retailers drop
prices to drive sales and cashflow, at the expense of margin. However, more retail leaders are becoming wary of the effectiveness of discounting and its long-term impact on their brand and business model.

Jeanswest executive general manager Anne Natale said the “old-school apparel retail mindset of dropping a campaign or a promotion every month” needs to change and greater emphasis must be placed on communicating a product’s value proposition to the customer.

In effect, retailers must focus messaging not on how cheap the product might be (especially if discounted), but rather why it is such great value at the price point and how it makes compelling sense for the customer to buy it.

“We can switch on promotions and not get the same result as we did in 2023,” Natale added. “Instead, we are being very thoughtful about what our marketing is trying to say, and how we can do this without bringing the brand down to a discounter with no brand value.”

Tom Leak, Coco Republic’s global general manager for retail, echoed this sentiment, saying that consumers are more considered in their spending habits and looking for value.

He, too, warned about getting sucked into a discounting cycle, which could have a colossal impact on margins that are already affected by rising variable costs like rent and wages.

“If you slip into the week-to-week (discounting) trading cycle, you could potentially find yourself with promotional schizophrenia’,” Leak said. “The best way to stay the course is to find other levers to drive sales, with the mindset that it should be about how you help your customers find value, not just discounting.”

For Coco Republic, Leak said the furniture retailer aims to differentiate itself by promoting its interior design services in every customer interaction and offering a bespoke delivery service.

Elise Tassigiannakis, global head of retail for T2, and Nicola Clement, former CXO for Adore Beauty, she stepped down in December 2024, both highlighted clear changes in consumer behaviour over 2024, reflected in the volume of products customers are buying per transaction.

Tassigiannakis said T2 has observed smaller baskets at checkout and increased cart abandonment. In contrast, Clement observed that customers are buying less frequently – with day-to-day between-sales periods getting longer – yet recording more units per transaction.

Adapting to the new market dynamic

In our conversations with retailers, this much is clear: Customers have defined budgets and are picky with what they spend their money on. Retailers are responding by looking closely at their brand messaging and customer experience to deliver on customer expectations.

For T2, that involved working on customer journey maps, conducting customer interviews, and redesigning retail processes to deliver on customer expectations, which Tassigiannakis defined as “memorable experiences and fast, friction-free retail”.

Likewise, Adore Beauty is focused on how it can improve the customer experience, raise brand preference, be front of mind, and grow market share from competitors, rather than tap more from their existing customers.

When it comes to its existing customers, Clement said Adore Beauty is focused on nurturing the bigger, bottom part of its loyalty pyramid through education and engagement to “take an unknown customer to being a known customer”.

Jeanswest is focused on listening closely to its customers, delivering a great value product, and investing in online and service levels in the distribution centre. Rather encouragingly, these moves have led to more of its customers moving away from purchasing marked-down stock and opting for full-priced purchases.

Leak, of Coco Republic, summarised the positive consumer response to such customer experiences succinctly: “Humans are humans, whether they are spending $5 or $500,000, you want to feel like the only person for that brand.”

Bringing down barriers

Though seamless commerce has broadened opportunities and reach for retailers, it also comes with several technical and organisational challenges when it comes to delivering the seamless customer experience.

Adore Beauty’s Clement said customers now want more than just a product with the best price. Rather, the product must come with the best service, and communication becomes key in any omnichannel platform.

“If (the customer) can’t get it from you quickly, they can get it from someone else. That is why making sure the customer is getting fast and timely communication is important,” Clement added.

“Retailers need to ask questions such as: How will we keep lines of communication open? What is the best method to reach customers? What systems, platforms and delivery are front of mind for the customer?”

Delivering on that expectation of communication can be difficult, but T2’s Tassigiannakis said that it is about more than just technology. Instead, it starts with empowering the team and understanding how roles need to shift to support, and get more personal with, the customer.

Is social media the answer?

Last year’s Australian Retail Outlook1 recorded a huge increase in the proportion of retailers who said TikTok was their most effective social media channel – the figure rose to 40 per cent, up from 14 per cent in 2023.

However, some retailers aren’t seeing social media engagement translating into sales. Adore Beauty’s Clement, for one, said social media can deliver traffic to the top of the sales funnel, but it is not that good at closing sales out at the end of the customer journey.

“With social media, you have to think about the [customer] journey and how to connect them through with other channels that are lower in the funnelling conversion,” Clement said.

While there are some discussions over the future of social media, with micro-gifting through chat apps and livestreaming platforms, the consensus on social media among retailers is that it primarily remains an avenue to engage customers, informing them of the latest products and where to get them, creating a conversation, and building a community.

Keeping tech fit for purpose

Over the past decade, retail has experienced a seismic shift as new technologies and systems emerge to drive sales, customer experience and operating efficiencies.

As legacy systems get older, however, retailers are facing critical choices around which technology they are implementing, replacing or updating – especially when times are tough, and budgets are tightening.

“Too much marketing technology is over-engineered in its intelligence but under-engineered in its capability of delivering what businesses actually need,” Adore Beauty’s Clement said. “Very often, businesses end up paying for things that have overlapping capabilities but can’t do everything and cost too much to integrate.”

Jeanswest’s Natale agreed with that assertion, as the business has found that it was overburdened with systems that don’t talk to each other, which resulted in the company having to keep a higher headcount just to analyse the data.

With technology being more ingrained into every facet of retail operations, reprioritising technology adoption as ‘what it is supposed to do’ rather than ‘what it can do’, could not only save costs but greatly improve efficiencies.

“Now more than ever, retailers need to keep up with disruptive technologies that are reshaping the sector in real time,” KPMG’s mid-market retail and consumer lead, Peter Marczenko, observed.

“However, the fundamentals of ensuring that your tech stack is fit for purpose, and it aligns with your business and operational priorities, remains critical, especially for mid-market retailers.”

All in the same boat

Despite coming from diverse retail categories, the retail experts we spoke to landed on a similar page when it comes to consumer behaviour and the opportunities ahead.

As T2’s Tassigiannakis put it, “Customer expectations have never been higher, as they are looking for quality, convenience, availability and sustainability, all of which retailers need to deliver on in a way that is market-leading and cost-effective.”

With the economic tides continuing to shift going into 2025 and beyond, it appears that many retailers across different categories are in the same boat.

KPMG’S key insights

Traditional discounting strategies don’t appear to be delivering the same results or customer responses as they once did. Why?

Customers are more value-focused than ever and online disruptors are reshaping value expectations and shopping behaviour. So, while some brands have invested heavily in their brand and product value proposition, in a market where differentiation (other than on price) is getting harder, loyalty is reflected in what customers do, not what they say.

The bottom line? Customers want clear product communication that demonstrates value, not just price.

This article first appeared in our sister publication Inside Retail

The post Spending is still down. Here’s how to keep afloat by delivering value to your most loyal customers appeared first on Inside Small Business.

Whether you’re a small business, sole trader or tradie – we all know that late payments aren’t just an inconvenience. The delayed processing of invoices minimises cash flow, hinders business growth – and if we’re honest, can often make the difference between fulfilling a mortgage payment or providing food on the table for our families week-to-week.

One of the most important things to realise, if you’re one of the many small businesses struggling with late payments, is that you’re not alone. Each year hundreds of millions of dollars of bad debt gets written off by small businesses, tradies, and sole-traders in Australia. And it has to stop.

Together, we can do something about it. I’ve put together my top four tips to help your company collect those outstanding debts – giving you the freedom to focus on what you do best in business, for our community.

1. Check your contracts

Take the time to review your contracts and agreements, focusing on the terms and conditions originally set out for payment. Your contract should include options for debt recovery. It’s important to review what was agreed, and where you now stand.

2. Send a reminder

Personally reaching out to remind a company about an overdue invoice is a necessary first step. There may be a whole range of reasons for a late payment – showing a business that it hasn’t been forgotten, and how important it is for you personally, can help move the process along.

3. Know your rights

There are laws in Australia for debt protection to assist small businesses and sole traders. Stay up-to-date with current legislation and know your rights in case you need to use them.

4. Reach out for help

Sometimes, seeking additional help from an agency to collect overdue payments is necessary. Do your research – I have worked with struggling union members and tradies throughout my career – and one of the biggest complaints was that none of the larger collection agencies would assist small businesses, or they would ask for an unreasonable percentage of the debt collected. Seek the services of a debt collection agency specialising in small business.

Unpaid invoices cost small businesses more than just money. Time, business growth, jobs and mental health can all be significantly affected. Do yourself a favour and don’t wait another day – take action to collect your unpaid invoices now, and get back on the road to business health.

James Stewart, Managing Consultant, Bill Chaser Pty Ltd

The post How to collect late payments appeared first on Inside Small Business.