A major shift is happening in the country’s retail industry—consumers are spending less, and businesses are feeling the strain. With growing demand for low-cost goods and fast shipping, retailers are struggling to keep their margins intact. Can they survive the squeeze?
A recent analysis of millions of orders from the country’s leading retailers has revealed a significant shift in consumer behaviour. The value of the average online order has seen a sharp decline of 23 per cent over the past two years, with the average spend dropping to $98. This data, provided by Shippit, an Australian multi-courier platform, highlights the impact of economic pressures on shopping patterns.
Despite this overall decrease in spending, there’s a silver lining for retailers during sales periods. The research indicates that during these times, the average order value increases by $32. It seems that when sales are on, Australians are ready to open their wallets a bit wider, taking advantage of discounts to buy in bulk or invest in higher-value items.
Interestingly, while consumers are spending less per item, they are purchasing more items overall. Since 2022, the average number of products per order has risen from 2.9 to 3.4. This suggests that shoppers are looking for value in quantity, opting for more affordable goods without necessarily reducing their overall consumption.
Retailers, on the other hand, are facing their own set of challenges. With the Australian Bureau of Statistics reporting a 50 per cent surge in business insolvencies this financial year, and a 14.2 per cent increase in retail trade failures, the industry is in a state of change or uncertainty.
Shippit co-chief executive Rob Hango-Zada describes the situation as a ‘perfect storm of shifting consumer expectations, economic pressures, and intense competition, particularly from global players.’
One area where retailers seem to be overestimating is delivery times. The research data shows that while the average quoted delivery time is 5.6 days, the actual delivery time averages just 2.2 days. Moreover, delivery delays have halved, dropping from 15.7 per cent of all orders in 2022 to 7.7 per cent in 2024. This discrepancy suggests that retailers could improve customer satisfaction by setting more accurate delivery expectations.
The rise of delivery services has also led to a more localised approach to distribution. One in seven orders is now packed within 15km of its destination, compared to one in ten orders two years ago. This proximity could offer opportunities for further cost savings and efficiency improvements for businesses.
E-commerce warehouse management specialist Johanne Panzer emphasises the importance of retailers setting prices strategically during sales periods to capitalise on consumer spending.
‘More than ever, success in eCommerce depends on balancing profitability with exceptional customer experience. As businesses shift toward more margin-conscious peak sales strategies, optimising shipping costs, leveraging multiple carriers, and investing in automation have become essential,’ he said.
For shoppers over 50, who are often on fixed incomes or managing retirement savings, these insights are particularly valuable. By understanding the trends and adapting your shopping habits, you can make the most of sales periods, seek out the best deals, and ensure you’re getting the most value for your money.
In conclusion, as the retail landscape evolves, both consumers and businesses must adapt to survive. For shoppers, this means being more selective and strategic with spending. For retailers, it means meeting the challenge of providing value and convenience in a highly competitive market.
By staying informed and flexible, you can navigate the delivery crunch and keep your shopping bill in check.
We’d love to hear from you, our YourLifeChoices readers. What strategies do you use to find the best deals? Share your experiences and tips in the comments below.
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