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Shopify research finds shoppers bear the brunt of higher business overheads

Australian retailers admit to passing on higher cost-of-doing business to their consumers, says research by Shopify.

The Shopify Australian Retail report – conducted in partnership with YouGov – studied 200 medium retailers and 1000 customers and found 58 per cent of retailers were passing on a “majority” of business costs to consumers.

The biggest strain on company budgets was higher costs of wages (45 per cent) followed by the increased cost of service debt (43 per cent) and surging operational costs such as rent and energy bills (41 per cent).

Though 99 per cent of retailers reported being impacted by macroeconomic pressures, 62 per cent of direct-to-consumer retailers were absorbing a majority of costs – signalling the sector is still after raw customer growth over profits.

James Johnson, director of technology services & enterprise of APAC at Shopify, said Australian retailers are in a “precarious position” being trapped between growing price sensitivity from consumers, higher cost of living and inflationary pressures.

“In such a competitive environment, many of the retailers we’re speaking with are doubling down on customer-focused initiatives, whether that’s expanding their product offering to appeal to a broader range of consumers, or investments in customer experience, personalisation, and loyalty programs.”

Meanwhile, about 98 per cent of Australian businesses state they will be investing in different technology measures in the next 12 months, with 44 per cent investing in real-time data analysis.

Two-thirds (or 64 per cent) of businesses say they will be using technology to improve their customer experience through automation.

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