Australian retail spending growth slows down to 2% YoY in 2023

Whilst traditional retail spending growth slowed, online retail increased in 2023. 

The retail sector in Australia experienced a slowdown in spending growth in 2023, dropping from 9.3% to 2% year-on-year. 

According to the 2024 Inside Australian Online Shopping report, the slowdown in spending growth posed considerable challenges for both retailers and consumers alike. 

Consumers exhibited caution in their purchasing habits, showing reluctance towards non-essential expenditures. For the first time in five years, non-discretionary spending outpaced discretionary spending, reflecting changing consumer priorities in a shifting economic landscape.

Retailers have also adapted to strategies such as focusing on long-term initiatives aimed at cost reduction and productivity enhancement, whilst others resorted to short-term tactics like aggressive discounting to stimulate demand and manage inventory.

Meanwhile, economic stimuli such as interest rate adjustments and tax cuts are expected to bolster consumer spending power by an estimated $50 billion in fiscal year 2025, potentially revitalizing the sector by the end of 2024.

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Despite the overall slowdown, online retail increased, reaching around $41.4b (A$63.6b) in spending. 

Consumers favoured online transactions, making smaller but more frequent purchases.  

Online marketplaces, particularly within a variety of stores, saw a 9.1% increase in spending. Additionally, the food and liquor category witnessed a surge in online grocery purchases, contributing to the overall growth in online retail spending.

“In 2023, we saw a period of moderation in retail activity as Australian consumers and retailers adapted to changed economic conditions,” said Paul Graham, group chief executive officer and managing director of Australia Post.

“Though it’s been a challenging year for many, the Australian eCommerce sector has proved its resilience, ensuring it is well positioned for opportunities that may arise in the future,” he added.

$1 = A$1.54