Discounts, online shopping and the strong Australian dollar may ring like the much awaited after-school bell to shoppers’ ears, but for local retailers, they are challenges that will have to be tackled in order to keep profitable.

According to a study conducted by BRWand AMP Capital Shopping Centres looking into the local retail industry, almost a quarter of local retailers felt uncertain about the economy and are planning on lowering their business expenditure. 

However, the 'Business of Retail' report also found that 8 percentof Australian retailers, an industry that is worth $244 billion, are planning on expanding their businesses this year. Sales, however, will no longer be used as the main tactic for attracting consumers due to the phenomenon of ‘sales fatigue’ among shoppers. Almost half of local retailers feel that “sales are now less effective, and that cynical shoppers simply don’t expect to pay the recommended retail price”, and that the expectations of constant sales is becoming a “significant business challenge”.

According to Kate Mills, editor of BRW, other issues that Australian retailers face with on a regular basis include rising interest rates, which could potentially bring down consumer confidence, as well as the rising Australian dollar that encourages local consumers to look to foreign destinations for retail therapy.

Another growing trend that is threatening local retailers is group buying, with IBISWorld forecasting that by 2015/16, group-buying returns will exceed $650 million, which will make up 2.1 percentof the local online retail market.

“Offering three major selling propositions – group voucher discounts, clearance goods and travel for limited periods – this sector is now the fastest growing retail platform in Australia,” says Rob Bryant, general manager of IBISWorld.

To counter these changes in Australian consumers’ retail behaviours, Stuart Langeveldt, head of marketing and communications of AMP Capital Shopping Centres advises that retailers must focus on improving customer relations and engaging with the community. “Retailers have to prioritise differentiation through great customer service, well-trained and motivated staff, clever advertising and use of social media and loyalty schemes, as well as establishing meaningful credentials around the community and environment”. 

Mills believes that customer service is the key to encouraging traffic into retail stores. “Service is critical to winning back shoppers," she says. "I would urge [retailers] to invest in outstanding customer service as a priority”.