INDUSTRY REPORTS
2026 State of the Retail Industry
1,600+ retailers and consumers across Australia and New Zealand reveal how retail is navigating complexity, with composure.
Lightspeed's Retail Report Series
In March '26, we surveyed hundreds of retailers & consumers across Australia and New Zealand.
We wanted to understand what's really happening on both sides of the counter. Each report explores two perspectives: the customer's experience, and the retailer's world.
At a glance
In-store still wins
73–77% of consumers still prefer to shop in-store.
Costs up, prices held
99%+ of retailers saw costs rise, and most didn't pass it on.
AI finding its place
More than 40% of retailers plan to implement AI over the year.
Where customers actually shop
The channel split across Australia and New Zealand reveals a market that's more layered, and more local.
In-store shopping
While big chains (e.g. Kmart, Farmers) dominate, independent retailers are holding their own. Nearly 4 in 10 consumers shop at local businesses in both markets.
AU: 73% big chains, 37% local businesses | NZ: 77% big chains, 40% local businesses
Online shopping
Online shopping preferences are broadly split, with notable differences between the two markets.
- Local retailers: AU - 33% | NZ - 34%
- Marketplaces (e.g. Amazon, eBay, TradeMe): AU - 42% | NZ - 19%
- Overseas budget platforms(e.g. Temu, Shein): AU - 22% | NZ - 32%
- Overseas retailers:: AU - 12% | NZ - 13%
Social commerce
In Australia, 23% of Gen Z are buying through social platforms like Instagram and TikTok. While in New Zealand, only 2% of Gen Z shops on social media.
What drives spending?
More than 1 in 2 customers pause before making a purchase due to cost-of-living pressures. But when they're ready to spend, these are the factors that influence where they shop.
Free > Fast
Consumers want convenience but not at a cost. Free delivery outranks fast delivery in both countries.
In Australia: 74% free vs. 57% fast; in New Zealand: 67% free vs. 48% fast.
Service is still king
Good customer service is the single most important factor for consumers in both markets (AU: 83%, NZ: 82%).
AI & Technology
AI helps customers buy faster
The most valued AI tools remove friction from purchase decisions.
AI-powered future
Most retailers are using AI or planning adoption within 12 months.
Technology's proving its value
Retail tech delivers measurable operational gains.
More time for what matters
Tools like POS, inventory, accounting and reporting software help retailers reclaim over 1 hour and 20 minutes daily, on average.
Challenges
Amid the opportunities and momentum, the industry also faces pressure, from rising costs to intensifying competition.
Costs up, prices held
Over 99% of retailers saw costs rise last year. 6 in 10 are absorbing half or more of that increase instead of raising prices.
Pressure on all fronts
Retailers across Australia and New Zealand, face a wide spread of consistent pressures across cost, competition and operations.
The real challenge is their cumulative impact.
Where retailers are focusing for the next 12 months
Physical or digital, cost or growth, are no longer trade-offs but connected levers. The year ahead is defined by parallel priorities.
Two sides of the counter
Customers want value, trust and a reason to return. Retailers are delivering under real pressure, without compromise. Two countries. Two perspectives. One clear picture of where retail is heading.
Read the full report.