Heading into 2017, Australian retailers appear positive about their prospects with new stores, new products and online offerings top of mind to drive sales growth.
This is according to a survey of 52 executives and senior management from leading retailers operating in the Australian market.
The research, conducted by Deloitte, took place during September and October 2016.
Deloitte retail executive David White said it revealed a surprising shift in power.
“What is noticeable is that foreign-owned online competition is now seen as the least threatening competitor.
"This both reflects the weakening of the Australian dollar, making overseas websites more expensive, but also the rise in the number and quality of online offerings being offered by domestic based retailers."
The survey found 82% of retailers expect an increase in earnings over the next 12 months – exactly the same percentage as last year.
More surprisingly, a third anticipate earnings growth in excess of 10%.
71% intend to increase their store footprint in the next 12 months – the highest seen in the five years of the survey – and 42% expect new stores to be the most significant driver of growth in 2017.
“As companies refine their omnichannel strategy, what is becoming clearer is the critical role of the store," White said.
"With many pure play online retailers also now seeking a physical retail presence, the reality is that making money through online sales alone can be incredibly tough.
“But underlying this, significant change is taking place in terms of what these new bricks-and-mortar stores look like and the role they perform.
"New stores are becoming intertwined with retailers’ online offering, store layouts are changing, interactive technologies are being introduced, and the customer experience is being transformed.
“We partly have the influx of international competitors to thank for helping drive this change – foreign-owned bricks-and-mortar stores are cited as the greatest competition for Australian retailers.
"But there are also some great examples of Australian retailers driving innovation in this space such as the increasing use of flagship stores designed to primarily build brand not sales or the use of endless aisles to allow smaller store formats whilst still meeting the needs of the customer.
“With continued strong economic conditions in Australia relative to other countries, we look set for more new international entrants in 2017.
"However, they will find local retailers that have shifted their focus towards controlling costs and efficiency and are better prepared and skilled to take on new competitive challenges compared to five years ago.”