Retailers reset expectations for 2026 – operations is where the battle is won
Australian retail and e-commerce leaders are entering 2026 with sharper realism than in recent years. The volatility of the past half-decade, from supply chain disruption to inflation, labour shortages and fluctuating consumer demand has fundamentally changed how retailers think about growth, investment and risk.
Insights from Argon & Co’s Operations Outlook 2026 research, a cross-regional study of senior operations, supply chain and manufacturing leaders, show that Australian retail organisations are shifting their focus. Rather than pursuing aggressive expansion or large-scale transformation programs, many are doubling down on operational discipline, execution reliability and controllability.
Productivity has become retail’s defining constraint
For Australian retailers and e-commerce businesses, productivity is no longer a back-of-house efficiency conversation, it is a frontline commercial issue.
The research indicates that productivity improvement sits among the top operational priorities for Australian retail leaders, driven by persistent labour constraints and continued cost pressure across store operations, fulfilment and last-mile delivery. With limited ability to pass price increases onto consumers in a highly competitive market, operational inefficiency directly erodes margin.
Retailers point to fragmented planning processes, inconsistent execution across channels, and manual workarounds between systems as ongoing barriers to improvement. As omnichannel complexity increases, the cost of poor coordination between merchandising, supply chain and fulfilment has become more visible, and more expensive.
Cost pressure remains, but the response is maturing
While cost pressure remains elevated across the Australian retail sector, the response has evolved.
Rather than blunt cost-cutting, retail leaders are prioritising operational control and resilience. This includes improving forecast accuracy, simplifying ranges, stabilising supplier performance and reducing variability across distribution and fulfilment networks.
The research shows that many Australian retailers expect operating conditions to remain challenging through 2026. However, fewer are pursuing short-term cost reductions that risk undermining service levels or customer experience, particularly in an environment where loyalty is fragile and switching costs are low.
Instead, organisations are focusing on structural improvements that make their operations easier to run, scale and adapt as demand fluctuates.
Digital ambition outpaces digital readiness
Technology continues to be viewed as a critical enabler for Australian retail performance, particularly in planning, inventory optimisation and fulfilment execution. However, the research highlights a persistent gap between ambition and readiness.
While most retail leaders recognise the potential of advanced analytics, AI and automation, many acknowledge that foundational challenges remain, including data quality, system fragmentation and change fatigue from previous transformation efforts.
As a result, Australian retailers are increasingly taking a pragmatic approach: Optimising existing platforms, simplifying customisations and strengthening governance before layering in more advanced capabilities. AI is firmly on the strategic agenda, but practical, scalable use cases within core retail operations remain limited.
Confidence is cautious, but stabilising
Despite ongoing headwinds, sentiment among Australian retail and e-commerce leaders is not overtly pessimistic.
The research suggests confidence levels are stabilising compared to recent years, reflecting a growing acceptance that volatility is now a permanent operating condition. Rather than attempting to predict demand with precision, retailers are investing in adaptability, building operations that can respond quickly as conditions change.
Encouragingly, many organisations report stronger alignment between executive leadership and operational teams, with clearer prioritisation of initiatives that deliver tangible outcomes rather than theoretical benefits.
Execution will define retail winners in 2026
Entering the new year, the message from Australia’s retail leaders is clear: Execution discipline will separate winners from laggards.
High-performing retailers are not necessarily spending more, but they are more deliberate about where they focus, more realistic about change capacity, and more effective at translating strategy into day-to-day operational decisions.
In an environment where consumer loyalty is fragile and margins are thin, operational excellence is no longer a support function for Australian retailers; it is the strategy.
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