From cybersecurity, to personalisation and AI: How are retailers investing in new FY?

By now, the new financial year. After a FY24 that saw consumer spending soften and business budgets contract, the retail sector will be hoping for a change of mood and fortune in the new financial year. While uncertainty and volatility will likely persist, green shoots of optimism are beginning to appear.

Tax cuts for millions of Australians and the approaching peak season will inevitably provide plenty of opportunities for the retail sector in the months ahead. In fact, according to the latest edition of Deloitte Access Economics' Retail Forecasts, real retail turnover is expected to increase from 0.0% in the 2024 calendar year to 2.3% in 2025. 

As retailers seek to maximise peak season and maintain their momentum with sustainable growth in 2025, technology - as is so often the case - will be crucial. But how are retailers allocating their budgets and prioritising their tech investments to capitalise on short- and long-term opportunities?

Cyber security
According to SHOPLINE's Unified Commerce Benchmarking Study, which sought to understand how retail business owners and decision-makers are investing in 2024, cyber security is a priority focus of investment. By investing in cyber security, retailers are doing far more than merely increasing safeguards for their business and customers online, they're investing in growth. 

As breaches increase in severity and regularity, consumers are becoming increasingly discerning in what retailers they interact with, what data they share and how it is stored and protected by that business. If they can't trust a retailer is taking cyber security seriously, they'll find a business that is. That means strong cyber security protections can genuinely drive both customer acquisition and retention through the trust it creates.

In total, 69% of retailers will increase investment in cyber security this year, according to our research. That figure rises to 89% of very large retailers - those with over $100 million Gross Value Merchandising (GVM) - and 85% of large retailers - those with $50-100 million GVM. Concerningly, though, just 38% of small retailers - those with less than $10 million GVM - are investing in cyber security. 

Cyber attacks are indiscriminate, meaning businesses of any size - including small retailers - are at risk. The reputational and financial damage caused by an attack can be catastrophic, and for smaller retailers, the margin for error is particularly narrow. So, for small retailers who are eager to appeal to the millions of Australian consumers who want to support local businesses, cyber security is a strong place to start - and a wise way to invest.

Personalisation
Personalisation has been a critical driver of customer experience and, therefore, business growth for a number of years. Its impact is unlikely to subside any time soon, and neither is investment. According to our research, over two thirds of retailers (69%) will increase their investment in personalisation. Today, consumers gravitate towards the brands that demonstrate a clear understanding of their unique habits and preferences, and provide experiences and product recommendations to suit. 

Imagine two types of shoppers frequent a particular retailer. One is a Gen Z consumer who loves gaming, and the other is a recent retiree who loves jazz music. They have completely different profiles and therefore require entirely different communications and strategies. That retailer should promote new gaming products to their Gen Z cohort on social media, while simultaneously promoting a new range of Jazz vinyl to their older customers via email. If that retailer treats them all with a one-size-fits-all approach and offers, they're leaving dollars on the table.

Again, however, just over half (53%) of small retailers are planning to increase their investment in technology that enhances personalisation in the months ahead. Our research also showed that one of the biggest barriers to technology adoption is cost. Through SHOPLINE's unified commerce platform, we provide all the solutions that retailers - big and small - need to start, scale and succeed in a competitive and rapidly changing retail environment.

Artificial intelligence (AI)
Rarely a day goes by without AI generating front page headlines. It's certainly top of mind for the retail sector, with over half (55%) planning to increase their investment in this game-changing, yet still fledgling, technology. There's a particular focus amongst medium retailers - those with $10-50 million GVM - with over three in four (78%) focusing on it in the year ahead. Expect those numbers to rise steadily over the short-, medium- and long-term.

From international chains to family run retailers, AI can optimise operations, improve personalised customer experiences, and even boost sales, retention and revenue. Whether it's analytics to improve inventory management or chatbots to provide 24/7 customer support, AI can revolutionise both a retailer's customer experience and employee experience. Ultimately, it can reduce operational costs and drive revenue, so its unsurprising to see so many retailers investing in it. 

Other focus areas for retail investment include data management, business analytics, unified commerce, and stock optimisation. For all retailers - from Australia's biggest brands, to smallest online sellers - the new financial year will again bring challenges and opportunities. However, through technology and savvy, strategic investments in the right platforms, many will be targeting the year ahead as the opportune time to transition their business focus from survive to thrive.