Webinar RDG Consumer Sentiment Retailer Strategy 2025|26 Program

All right, good afternoon everybody. Thank you for joining us uh this afternoon for our the launch of our white paper customer and global retailer sentiment 2526. Absolute pleasure for everyone to well for us to be in the presence of everyone and the opportunity to talk this through. So, I might just take a second to introduce our esteemed panel today. So, starting off with Mr. Brian Walker, uh, affectionately known as the Retail Doctor. He's the founder, CEO, and chair of Retail Doctor Group. And we look forward to hearing some insights from Mr. Walker for I believe it's the sixth year of this program. Brian, — it is Josh and nice to be here. Hi, everybody. — No worries. But also introducing Dean Salarakus, our knowledge partner, knowledge management partner, — retail doctor group. Dean, thank you very much for being here and also myself, Josh is the GM of operations and insights. Post this session as well. We will make sure that all attendees do get a copy over the next day or so of this white paper to uh to review. We do have a good hour together. Uh but what we're going to do is just run through a lot of the high level initial findings and look forward to receiving any feedback as part of the journey. — Thanks Josh. Everyone as Josh has said um we're delighted to bring this to you today. This is the sixth year of this particular study at retail doctor group. uh we get very close to insights, market, consumer, business, global and we build insights driven strategy which takes us then through into distribution and brand growth. Um but the difference with us is that we have a retail operations focus. So we're all about implementing the strategy if you like. Uh and then we have certain proprietary models through those programs and we have a separate business entirely which is an academy-based training. uh and this program of works such as the white paper essentially is about understanding retailer strategies. So we went out to retail leaders both domestically and globally through our membership and partnership with the Ebbleto group which is a worldwide advisory consulting practice. uh and we've gone out to all our member countries and we've interviewed retail leaders to get their strategic imperatives to understand their objectives, their drivers for where they see the next 12 to 24 months, their priorities. uh and in turn we've gone out at the same time parallel to consumers in these markets and we've looked at particularly Australian consumers and we've understood their priorities where they see their whole shopping journey the channels they'll use what they're thinking about what matters to them and then effectively aligned that to the strategy work of the leaders and really looked at the gaps and therefore of course with our background and expertise the house how to close them. I also want to call out light speeded our partner in terms of their panel development for the surveys. Um and I'm delighted to have Dean with us. Dean's joined as a knowledge management partner. For those who don't know Dean and that would be in the vast minority. Dean is a very experienced retail leader and adviser uh both in full omni channel online and physical retail. Josh of course has been with us for a few years which is fantastic and building up our insights work and runs the operations of the business. So Josh let's move forward. — Thank you Brian. Okay so a bit of an overview of some of the findings from this white paper. We've really clustered this into five uh key topics that we look forward to exploring with you a little bit further throughout this white paper. But one it's around customer behavior. It's the it's predicting responding to these changes. continues to be the number one strategic priority for retailers but also developing the customer understanding is their number one interest personally as well. But what we see from uh from a retailer's perspective is that they continue to face this pressure again this blending this balancing of customer attention and operational delivery digitalization. So customers are increasingly open to new shopping concepts, you know, personalization, subscription, live streams, Tik Tok shops, and they are all gaining transaction or sorry, they're all gaining traction uh as part of these new concepts. And retail leaders expect digital sales to keep rising steadily through to 2030. And that statistic which we'll explore a little bit further is actually expecting their sales to be circuit 50% by 2030 as well. Uh loyalty 51% of Australian customers say that

loyalty encourages them to visit retailers more often and 31% say it encourages them to spend more each time that they visit and 54% of Australian retailer leaders describe themelves as customer focused with most initiatives but most of the initiatives end at CRM and loyalty program. So we see that there's a clear focus there on Australian retail leaders and their f and their CRM enablement but also there is a connection between how Australian customers perceive those loyalty programs but we look forward to exploring that a little bit further. people remaining the number one area of scarcity and that's both in Australia and globally and also enhancing customer or company culture training and development as seen as the most important strategies both globally and locally to address these shortages and one of the really interesting concepts that we look forward to exploring further is this concept of AI integration and it's actually how the customers are using it versus how uh the priorities that are set from a retailer perspective as And what we initially see is customers are cautious yet optimistic about AI use mainly using it for you know time-saving aspects practical aspects in terms of search understanding products mixes where to find stuff. Uh retailers are increasingly seeing more and more value as part of AI in their operations and specifically in terms of BI and information analysis marketing and supply chain. I think one of the underlying narratives is the narrative of change. What we're seeing is an acceleration of time both in terms of strategic imperative and delivery for retail leaders uh and an acceleration of time and choice for consumers. So consumers are generally feeling more pressured uh but they have much more avenue now as we know to shop and to consume and to make their choices and to communicate with one another via the ever growing social media channels. So retailers are thinking as we move into retail leaders focus at CEO and board level about how do we navigate through the period ahead and what are the priorities. — Uh well this really leads us into the opening point when we go out to interview Australian CEOs what we see is that 82% of the CEOs recognize the need to change and of course traditionally strategic plans were you know three years possibly five at a long term. Now they're one to two years if that. — And terms like thinking around agility, mobility, future proofing and keeping much more fluidity in strategy is become the norm for Australian leaders. Uh that too we think about the metrics of strategic return, economic, people, uh social, they're also becoming shorter measurements. Um so change is very much on the agenda for retail leaders. Uh and that's also true of our global counterparts and I think the point that um Dean has made to this paper that this pressure testing of business models becomes more frequent um intervals of quarterly checks tests pressure test make sure it's on track against the outcomes desired. Um so this example of faster more mobile penetrating and shorter term results. — Thanks, Brian. And we see how that cascades into u the retail leader strategic priorities. And what we can see is just the shifting patterns that have happened especially over the last year and also in contrast to the rest of the world as well. And as we called out in the overview, adapting to and predicting shifts in consumer behavior still is remains the number one priority, but that's also escalated across the last year um both locally and globally. And we see also some trends and more so in Australia about this concept of store network optimization. So what does this look like from uh a store or physical experience roll out? Do I appeal to my customers on the do I focus my priorities on appealing to my customers in a digital lens? Do I need to establish the uh the physical experience more thoroughly? These are part of the high level considerations and as we go through key considerations there linked to the optimization aspect is this acceleration of digitalization still remaining quite a high priority although it has dipped in the past year uh and it has decreased significantly from a global perspective as well. So we can see that there's quite a lot of — strategic tension and where do we invest? How do we understand what's going to get us the best return on capital as part of this expense? — What this work showed us, thanks Josh

um was this idea of network optimization is not what it was. We talk now in terms of building communities, integrated omni channel or everpresent communities. we talk about uh going back almost to this less shops, hierarchy of shops, dialing up experience and Dean will touch on some of the elements of that. Um in this idea of rightsizing fleets, we're also seeing generational change and we've only got to look at our domestic landscape to see that some of those legacy brands that built a store on every corner are starting now to see that in fact they don't need as many stores. They're centralizing brand. They're centralizing a lot of those direct to consumer activities, seeing increased competition. And so that's redefining space. But we also know that the jewel in the crown to Josh's point of retail is the physical store. It's the experiential heartland. So essentially it will vary from business to business, but store right sizing and optimization to enable digitalization is key. and the study bears that out. I'll move through this one fairly quickly. Of course, we're seeing some of the pressure points for our leaders. Inflation as we know coming out of the 23 24 period into 25 is now starting to be much less of a concern. Uh, interestingly, cash flow margin management are high priorities. No surprises there. We do see movement on staff retention um but only marginal. It still remains a very large focus as does recruitment. Um more focus from our leaders on their ecom, their digitalization capabilities, not just in terms of capital spend for the architecture and the infrastructure, but also for people and now we're seeing more of a need for AI specialists in organizations which sits into this space and linked to that of course is systems and the focus on systems investment which has been strong now for a number of years. Um supply channel well again we'll touch on AI but much greater focus we're seeing much heavier competition from the direct to consumer models retail leaders are starting to feel that the Amazon Sheen T-U models collectively last year were about 9 billion Australian dollars of direct to consumer market share uh which came out of a fairly static retail growth year so clearly supply channel getting product faster fulfillment all these areas are rising in importance and we saw a focus and probably not quite enough on staff training and we'll come to that. So retailers have got a lot of pressure points. Um the movement of them we're focusing much more now on the customer and much more preparation for that customer. And as we move through for understanding Australian retail leader customer priorities, we see that loyalty remains their number one priority um for the next 12 months followed then by well trained friendly staff in stock positions in and then increasing theater in store. So we're really seeing about this whole concept of making sure that when our well it's really about the enablement of how we retain those customers, how we engage those customers to continue to come back to us time and time again. It's building those tribes, building that relationship with them is we're spending so much money in investing so much money into actually acquiring them through the brand delivery, through the messaging. We want to make sure that we're able to retain them and realize that investment spent. But then also how are we also delivering from that perspective too. So we've got our brand delivery and our brand promise. So the brand promise can bring them in but how well are we executing on the well trained and friendly staff. How well are we executing on our instore theater and engaging that customer as part of that progress as well. We see some of the we see further down the line some of the other considerations like personalization. Yes, that's significantly increasing versus last year and customer targeting. But when we have a look up the front end of the chain of where our customer priorities are, it really does link back to this brand promise, brand delivery. — What uh what's interesting is we know that over 90% of Australians have a loyalty program of some description. And one of the pieces that we talk about and for those who've seen our white paper on loyalty and if not please contact us recently was that we saw a very high focus on uh the value of emotional loyalty understanding that tribal belonging — versus transactional grocery type loyalty. And the other quick call that I'd make is that whilst we talk about transparency of inventory data, we talk about augmented reality, it's not yet really impacting the psyche and the

behavior of Australian consumers. So there is a gap, a clear gap between uh conversations and the work that's being done in these areas versus consumer awareness and preparedness. So that lag is interesting and retail leaders are seeing that they're zeroing in on essentially preparing for the future but investing more in the short term at these deliverables that we're touching on such as a good loyalty program people and of course products in place was interesting to see as inflation rates decline uh both here and in other countries but particularly in Australia for this one we start to see a growing confidence moving from somewhat pessimistic in previous years to slightly more confident um and we see a greater confidence in financial position and when we looked at the macro of Australian financial in the last year 12 months we saw a definite move to value in 24 months in retailers as consumers were moving to value influenced by cost of goods living which is starting to come back influenced by at the other end of the spectrum u Australian consumers that owned property were seeing a appreciation in their capital rates. So they were putting more off more on their bank accounts to offset that. The banks have never had higher deposits. So what we see here is uh two things that are worth thinking about. One is that retail leaders certainly planning out that year to two to three years and thinking about those macro factors. What we get considerably from consumers is not that time span. They're far more immediate. Consumers are far more living in the here and now. So whilst we talk about this idea of the two aligned, in reality, consumers are a lot more about gratification, make it about me and make it quick. And the time span of retailer thinking is typically longer, but the financial indices are strong. I expect we'll see a strong Black Friday period into Christmas and particularly if we see another rate rise come early November. — How have the Australian customers changed in terms of their shopping habits? So look, they've really stayed pretty steady over the last year. Anyway, what this does reinforce is it's retailers needing to balance their cost and delivering value and quality experiences as well. So when we have a look through about at some of these key changes or what actually becomes a priority is even though we are feeling optimistic in terms of our spending and how much we do have in the bank we are conscious of how much we are spending as well. So it means that we want to receive the value out of that and as Brian was saying earlier value can be received in many different forms that terms of the product speed of fulfillment and it can also be received in terms of experience. And so this is really where it's about zeroing in from a strategic lens about what is important to your customer coming back to that high level view of who is my customer why do they come to me and how do I prioritize them as part of this experience you know having looking at the aspects of shopping online we can see that there's that saving time aspect stays very steady uh we see slight increases uh in terms of human interactions but essentially the priority hasn't overly changed in the last year. So again, it comes back down to this whole concept of how do my customers receive value out of our offer? What do they prioritize from us and how do we consistently deliver that time and time again? — Yeah. And I might just add to that Josh also obviously could see from the top there that you know that last year it was 47% and this year it's 37%. And that difference obviously is spread amongst the other um options there for customers and so obviously there is just a slight pairing back of focus on price and more focus on value and other elements that impact the customer experience. — Yeah, I think that's a good point and it also speaks to the all the channels that are opening up and the immediiacy of the experience. — Yeah, I think that's a great comment. — Well, of course from this first section. So what should retailers do next? Well, of course, it is about getting closer to market trends, global trends and really using much more researchbased predictive analysis. It's very much around thinking about the small percent stuff, the agility of the retail delivery and deployment. Um, working with subject matter experts around looking at the trends because the trends are dramatic and will only continue with the likes of AI and so forth. And it also is about bringing innovation into the business. It's a term we

haven't used a lot of in the last while, but it's about bringing um gamechanging strategy where it's appropriate innovation. Technology enables that. Um and then finally, it's about thinking more and more around shop efficiency, online efficiency. Um, we're seeing that operational issues are increasing pain points for retail leaders and so continuing to grow that brand unique differentiation the way we've talked about and thinking less ultimately about channels much more about the brand and the deployment of the brand and coming back into this focus on operational efficiency. — Okay. And that wraps up our first section for retail leaders. And as we launch into our secondary section, artificial intelligence, one of the global hot topics. — Yeah, we're intrigued about this because of course this is the buzz term in all sectors. You've only got to read the media to see its influence in uh education, arts, science, and so forth. And you could be in a room and be convinced that the world would be dominated by this massive search engine which is essentially a planning a patenting machine. But what did it really mean for consumers today? in their buying? And ultimately how were retailers thinking about it in terms of their strategy and uh focus? Uh and so what we see from a retail leader lens as well is the step change across the need to adopt AI as part of the processes both operationally internally internal facing business aspects and also externally. How do we then personalize the customer shopping experience? And when we compare that sentiment versus last year, we see this significant change in the Australian leaders perceptions saying that it's increasingly become a higher priority or they strongly agree the need to personalize that using AI or their shopping experience using AI to meet our customers at that point of interaction is increasingly important. And what we see from the world perspective as well is they they've remained very steady on that sentiment versus last year. Uh but even more so integrating AI into our retail operations is crucial to stay ahead of the competitive drive and innovation and that's significantly changed up to 71% of sentiment. Uh strongly agreeing with that. — Yeah. Yeah, I think it's interesting in there how last year the world was pretty on top of AI compared to Australia who was, you know, a little bit further behind and then we've come up as a country um where the rest of the world is in terms of its thinking around AI um which shows we've caught up pretty quickly but we did start a little bit behind — and we caught up pretty we've caught up pretty quickly and the key thing that stands out to me here is also penetration and understanding. So because it's been such a popular buzzword for uh realistically the past three or four years uh but AI has existed for decades. I think the first artificial intelligence actually Brian you know that step better than me. When was artificial intelligence first coined or first utilized? — 18 1956. — You saying Brian's old Josh? Is that what you're saying? — No. I'm saying that he can recall. That's what I'm saying. — No, I read about it. It's even before my time, Josh. That's how long it's been going. But I do want to make one other quick comment. A year ago or two years ago, people would talk about AI as this sort of nebulous, you know, super intelligent being or something. But in fact, it's all about patterning at the moment. That's what it does brilliantly. And what we are seeing increasingly from our retail leaders is more understanding of the various platforms, the various usage from prediction personalization platforms through to um BI platforms through to supply channel type platforms, logistics algorithms and they're getting more and more particular and precise in how to use AI — and they're setting metrics and that's the natural evolution from its mass market exposure. That's the natural evolution. So AI sits as it does with any strategic tool. What are you trying to achieve? Why achieve it? What's the benefit? What's the value? And then AI plays its part. And for those who've read the Apple paper on um hallucinating AI and the way it can turn on itself, um be very aware it's not necessarily the omni truth to these things. It's still very much in its nient stage. I'll move to the next stage if I could. And as these concepts keep evolving, it always comes back down to this uh the concept of how do I want to use this or where am I able to use this in my business whether it's customerf facing internal facing and then how are we meant to how are we expected to deploy this and how are we going to measure this moving forward as well and as we um

as we transition through we'll also see some of these uh the barriers to what those AI adoptions are u largely led by the skills gaps and lack of talent to be able to implement, but also again the understanding linked to um core business value or core business propositions of how am I going to use this? — Yeah, and I think there are a couple other quick call outs. One is privacy issues of course. The other of course is the talent. Once again, we come back to people and talent. — They're all there, but it's certainly outlined in the paper. Um, and I think we'll move through these, but just to give you a sense of the way that we're aligned to both global ambitions of retail leaders and the way customers are thinking about it. — Business intelligence, analytics, and marketing, they're the two call outs for AI use as they are globally. No great surprise. And then other platforms will play more and more of a role as we go forward. Yeah, I think also on that the other thing that you can see there is that customer service is a bit further down and um customer relating or you know augmented reality solutions all that kind of stuff when it comes to customerf facing AI it's a little bit lower on the priority list and yeah — back office activities — and optimization — and that keeps coming back to this concept of how are we meant to use this in customer service. So it can be like a holy grail for us to paint that picture. But again, how is that physically developed? Whereas we see this significant step change from a marketing perspective. But when we think about you know all the APIs and integrations that have been released and to you know complete martekch stacks over the last three four years that picture of how it's being used is very clear in the business. — So becoming more and more clear. — That's a really good point. I think that's where, you know, obviously AI the benefit I guess the problem with AI is it hallucinates, but it's kind of a it's what makes it so great and it's also a bug and so when it comes to things like fraud detection and customer service is very risky to put it in front of people in those situations. Oh well, what that showed us of course in 2025 was that there was some apprehension with Australian with consumers and this topic called AI. I think born naturally enough of a lack of understanding of what the AI platform is and what it's being used for. But what we saw was that there was a growing number of consumers, Australian consumers, about 47% who were sort of open to this AI product solution. So that showed us that 53% of thereabouts were still quite resistant. I think what we're seeing is a cautious consumer. It wouldn't you know retailers who are going out with sort of AI solutions tend to be more as the guys have said much more back office productivity gains less of this customer interface. Um but what we can see as AI generations continue and the growth continues naturally enough you expect Australian consumers to become more confident comfortable and increase the use. — Yeah. I think interestingly also with that like obviously 18% of people are very likely to trust AI is not the overwhelming factor there. The middle is where we're seeing people are like I kind of trust it. Um what this doesn't show is you know that you know it gives a result and that we may or may not build trust with that result but trust is also about the connection with the customer and you know when you're getting an automated response that connection is not really there. So I think that's just another consideration. — That's it. And it's also what that customer is trying to achieve as well at the same time. Is it the quick things that can be easily answered by someone on the spot instantaneously? I understand what I want to know and I can move on or is it something that you have to you know wait for a real human to answer and spend 20 minutes on a call waiting for that as well. So uh but the whole concept here as well is as the penetration of the category actually improves over time because this is the first time we've um we've asked this and not a lot of other external researchers actually asked these types of questions before as well. Um but it'll be interesting to see how that changes or progresses over the next years, few years uh as we become more comfortable with these concepts. — And I think quickly on that previous slide, of course, that question is specifically around are you comfortable with an AI assistant or chatbot providing you with a shopping suggestion or a product suggestion. So I think it needs to be taken in that context rather than sort of make it's really quite precise around this and we're seeing still some caution. — Yeah. — And then linked to that exactly is this advice uh simplification this comparison that that's what dominates the current use of AI tools today. So when we ask Australian customers have you used any artificial intelligence to help you research or decide what to buy that's what really stands out. And in

terms of those uh there will be no surprise to anyone but chat GPT or those similar AI agents uh very much dominate the aspect as well and as retailers start to understand and invest a little bit more in this concept or even test out the boundaries uh we're going to also assume that will fall on part of their uh communications with their customers as well. So this talks to that time lag that we've touched on. — Essentially in the moment 67% of the respondents are not using AI for shopping advice in any way, shape or form. — Mhm. — So retailers are spending money on AI. The larger cohort of customers aren't using it yet. — Now that's changing as Josh points out and I think Dean you can sort of build on that. Yeah, I was going to actually say something similar along the lines of um that you know I was at the Nora Genai Summit and there were some stats thrown around about that you know 6 months ago it was a negligible amount of searches were you know people using AI to search for products and use it for shopping decisions. Uh 3 months ago or 6 months ago I think it was or 3 months ago it was around 3% more recently it's 6% and they're expecting as it is today around 10%. So that acceleration while you know currently people are not using it as the majority or the main tool for search around product discovery and shopping um it's accelerating at a rate of growth. So I expect next year we'll be chatting about this survey again and we'll be talking about how big AI is in product discovery. It's not there today but I think that what you said Brian there is spot on that retailers are investing in it because they see it coming. — Yeah. Yeah, and it does signal from a marketing point of view for marketers to be thinking about — AI type based searches as distinct from traditional SEO type searches and linking that to products and so forth. So uh as Dean says it's coming downstream quickly and we and next year I think we'll probably see the inverse of these numbers — points that we've uh sort of covered on the previous ones but indirectly very much but asking chat GPT or any other AI assistant to help you with the following look it it's the price comparisons finding those deals it's the convenience powered search that is occurring so where we're not where we would traditionally have gone to Google to say where do I find uh or where can I get a product or what do I need the where we're starting to move towards or um where this whole concept of go is it becomes this powerful comparison tool of what can I get where can I get it how much for how fast can I get it as well so it really does uh create this convenience-driven approach for customers for the future. — Yeah, I mean just that just to overlay again, similar sentiment to what I said on the last slide. Um I'm doing some research in the background, but you know, it's taken Google, it took Google, I think 5 years to get to the number of inquiries that chat GPT has today. Um and we're only two years into that journey. So, you know, it's just going to continue to accelerate faster and faster. So, again, like Brian said, I think in 12 months time, we're going to see the inverse of these numbers. Uh well, I think this is really saying more of the same, isn't it? I think what's essentially interesting here, of course, is uh a preparedness from Australian consumers to get into AI. Retailers need to facilitate it. Um it's new. It's still in this Nancy stage, but Australian consumers by and large are curious and will use AI tools in the future. Uh what's interesting also to contemplate around this is retailers educating their customers on the use of AI and how they use it in product selection, price selection and so forth. Um we haven't seen much of it but I've seen a bit of it overseas where retailers are on the front foot about educating their customers on the AI platforms they're using um dedicated apps and so forth. So what should Australian or what should retail leaders pardon me do next? Uh well I think it's becoming entwined into the way the business is done. So it's really understanding that by the way not all customers are the same. Different consumers will take different usages and preferences into AI and that's becoming fairly obvious in the way that they search. Um it's certainly from a retail strategy point of view very clear mandate on how AI will benefit the business in what area from supply channel customer personalization prediction through to business analysis and so forth. So it's about finding exactly where we need to

be in that space. Um and in understanding the evolution of AI keeping a keen handle on where that's going. Um and of course using AI increasingly not just in cost down productivity type spaces but certainly in aiding and assisting retail deployment and the coalace and as Dean said earlier what we are seeing from a lot of consumers is a little bit of early reticent reticence to be talking to AI chat bots and so forth you know so again we go back to this central human experience where we can any comments there gentlemen before we uh — just the other point around SEO and GEO you know obviously we the customers are using AI as well and that's the other key point from the research there I think is that you know customers are going to start using AI for their searching and um retailers need to get fit for what's coming down the line in terms of how the customer is actually going to do their shopping behavior in the next 12 to 18 months. Yeah. — And it's where you know where these changes they're not going to be drastic changes that are going to be any sort of silver bullet, but it's about making sure that we're taking them into consideration for the future strategy. So again, it's that positioning of where will the customer be in 5 years time and how do I put the actions into place today in order to meet them where they're going to be. — All right, thanks Jen. So next we'll move on to the retail ecosystem and we'll um we'll go through the this section pretty handily. But what we've generally seen is again channels using the past 12 months. We've seen a little bit of a fallback in some of these independent um independent methods or locations but what we see is that the physical stores uh still remain the primary uh the primary channel for customers. We do see marketplace against have a number well a consistently strong secondary place as well. Um and we see a slight decline from in standalone stores and also those local shopping or community shopping centers as well. I think the thing that is really calling out here is I think there's a real shift back into great physical retail — where it's done well where it's accessible where it's entertaining depending on what the offer is and then we're seeing these other networks if you like marketplaces and so forth being adjunct to that physical experience. uh and you could start to see it in some of these numbers. Whilst the standalone shows a small decline overall, we see the large shopping center remaining within a range reasonably consistent. We're seeing some decline in marketplaces. So overall, we're seeing customers having more choice using this breadth of channels, but ultimately the heartland is the physical environment. Yeah, I think interesting interestingly about that this data I think is the classic what we've seen at retail doctor group over the when we talking to clients I mean if you talk to the consumer says I do most of my shopping online um that the reality from ABS data is that 80% of consumers are actually purchasing in physical stores. So there's a complete disconnect around what consumers think here and you can see that in these results. It doesn't tell me that 80% of customers are shopping in stores. So, but this is a customer survey and this is about customers and — they believe they're using a lot of uh click and collect and marketplaces and you know and ecom and Facebook and all that kind of stuff. But the reality is that's not what's actually happening in ABS data. And I think that just shows about the psychology of the customer. — Yeah. I agree with that comment. I think there is this interesting piece where the customer will sign off on shopping. You know, this segregation between online and in store is far less segmented for the consumer, you know, ultimately. But where do they spend the majority of their time? actual physical expenditure? In the physical. — Yep. I mean, the majority of that obviously starts online as well. So, don't want to discount the the place of digital. It's more of the case of we can't view this in isolation, you know, they're connected together. It's the layers of the experience. — Yep. — Yeah. And what the digital shows us, it's a strong it's a very strong adjunct to the physical experience. — Yeah. — Absolutely. — Which is interesting. — Speaking of physical experience, um how do we how do retail leaders think their store networks will change over the next 12 months? Um or we actually see that we see a slight decline a slight comparable decline um versus last year in terms of store

network and for more stores. Uh we do see actually quite positively less well we see it less stores um has contracted versus last year as well. But the majority of respondents or actually just under um still say that there's going to be no change although it has increased versus last year. It's again coming back to this point of you know what is the role of the store? How does that impact our customer? Stores need to continue to combine this experience the service and fulfillment rather than the purely transactional components of the past. — Yeah. I think what's interesting, we've got worldclass retailers and we build world-class retail. I think there's a real move towards this hierarchy of physical space. You know, I think this oneizefits-all shop on every corner is going to be less prevalent to the earlier comments and the commentary here about the enduring power of physical stores. We're social by instinct. People like people. We've third in the world in shopping center per capita usage. So increasingly, you know, look at Mecca, look at Rod and Gun both in Melbourne opening these mixed category physical environments where there's bars and all sorts of things around these cosmetic and fashion retailers and they're building these wonderful magnets for human socialability and selling some product at the same time. So rethinking the role of the store and many of our retail clients are thinking about store of the future. They're thinking about partnerships, collaborations and they're rethinking this idea of the enduring power of physical stores and reinvesting in them. Uh we saw less than 30% of retail leaders expected the share of digital sales to increase above 50% by 2030. So when they were asked what share of your sales came from digital channels in the last 12 months and what are your expectations this of course is very category specific but what it did show was that we didn't see the vast majority of retail leaders thinking that all the growth or the majority of growth coming out of digital would grow exponentially. And I think what we're seeing now is that retail leaders are thinking about okay what is the role of omni channel what is the role of physical integrated with digital into a seamless brand experience and how do I best do that in terms of physical store growth network capability and of course AI included there. So, uh, we're seeing a real renaissance in some respects back into the power of the physical space and we saw this globally as well. — Absolutely. And then when we um when we review that in terms of how that's been translated from the selling platforms as well, it's the channels that allow for strong brand to customer engagement again remain the key channels for retailers. uh the two primary aspects website physical retail stores even though slight decline um that in overall usage but what we're seeing is an increase in these alternate platform usage to grow revenue. So it's not that our website or a retailer's website is going to be the be all and end all for driving um engagement and you know future revenue transactions. It's all these other platforms that our consumers live on and it's, you know, the Facebooks, the Tik Toks, uh the iconics of the world, the marketplaces. It's being present where our customers are and retailers will continue to adapt those platforms and broaden their digital reach uh to keep pace with media consumption and ongoing change in behavior. I think that the other quick thing here is that we probably will or we will capture more of the direct to consumer models because they're going to have an effect here as well. But I like this terminology about adaptation of the platform. I think we'll see much more fluidity into strategy as I touched on earlier and much more thinking about how do I put my brand where the customers are versus the classic of I'm going to put my brand where I want the customers to come to and be thinking much more about mobility and agility in format where they get their brands and the way that they connect with customers — across all channels simultaneously. And we've seen some nice examples of that. This one, naturally enough, talks about paid marketing channels. And once again, we see digital marketing is

certainly the most prioritized channel for advertisers amongst retailers. Uh and of course, we're seeing more brand sponsor, more brand visibility, engagement through the likes of sponsorships. But when we look at the growth in websites, a little bit of flattening out on social media, which is still continues to grow, the SEO search engine reasonably consistent but small decline and of course Google. I think AI is playing a bit of a part in that and then the rest. But have a look at newspapers, postal advertising, vehicle signs, all those classical ways of um communicating and paying into marketing channels and communicating brand. are coming much more to uh a social media focus, a digital focus and also entirely appropriate given that the majority of consumers now will be millennials who have the buying power and Gen Z are coming up quickly and I think this reflects generational change as much as anything. — Absolutely. — The cataloges are here. — Yep. Cataloges are decreased from 41% and 23 to 22%. So again those traditional avenues and — and the key concept here as well is um and it comes down to the category of usage is there is a time and a place but it's about effective targeting of customer — and um what's our return on investment for this as well you know are these being distributed to where our customers are. — Yeah. — All right. And speaking of where are our customers, a quick overview on social media engagement, the trends and what we can see is that Facebook and Instagram, you know, no surprises there. They still remain the largest channels that people are on. So when people or when uh other businesses say Facebook is dead, it's obviously not because there is a significant amount of time that's um being spent on this as well as Instagram. But what we find quite interesting as well is this continued rise of Tik Tok and Facebook um or as well as FA as sorry Tik Tok and YouTube and really coming down to this contrast of long and short form platforms um understanding the type of content that we're able to be used these consumers are consuming as well. It's about adapting for those models at the same time. So if I want to reach the customer that goes on Tik Tok, what is my approach? If I want to reach the customer that goes on YouTube, what is my approach? So there is a um there is playing room for both. — Yeah. I think interesting about this just as an overall summary of it, you know, the bigger channels are getting bigger and the smaller channels are getting smaller. — Yeah. — As as what you can see there. So Facebook was already big and it was the biggest for the last three years and it's gotten bigger. you know, same with Instagram, YouTube, and Tik Tok. So, the big channels get bigger and the rest are in decline. Uh, I think we sort of touched on some of this concepts you tried in the past year. I think in the interest of time, I'll leave this with everyone, but essentially you could start to see that there's um a much broader range of choice and dilution each type of channel accordingly. Um again this is really around well what should retailers do next? Review current customer journey. Understand the drivers of loyalty. We obviously use limbic and we're very much on the psychoraphics of behavior. Understand where customers so understanding where your community lives building an emotional and practical connection to them. Um and then of course once you understand your customer you're able then to underline align marketing. Now we come from a position of insights drive strategy. So you kind of expect us to be looking closely at the way retailers are thinking about genuine insights and understanding their consumer, their type, who they are, why they shop that brand, why they go to competitors, — and of course all their lifestyles. — Absolutely. Thank you, Brian. All right. And we'll um hand over to Dean to lead the customer centricity and people opportunities. — Yep. conscious of time that we've only got a not long left. So I'll power through really quickly and I'll — keep it briefer than I was planning to. Um so I'll skip that first part of this slide. The key two key things I take from this um thing the question you know for that second set of graph there of the two graphs the second graph you know we asked um retailers which of the following capabilities do you have in place or are planning to put in place in the next 12 months? um CRM and loyalty, you know, is has been and still remains for the last few years the main um primary capability for retailers. Um interestingly, customer focused leadership has grown over the last 3 years as a key focus for retailers. I just think that's interesting. Mhm. — You know, you would have expected

customer focused leadership would always be a key thing for leadership, but obviously in the past it hasn't been as big as it is today. Uh this next one, the key stand out there is the on the left. Um so again, we asked um retailers what you know what what's your currently what's the most uh where you having the most difficulty in terms of hiring talent and it's in retail operations. um compared to the rest of the world that 25% next to the 55% is what the rest of the world thinks around the difficulty in hiring in retail operations and in Australia it's 55%. I think that's interesting cuz that makes us our market very unique compared to the rest of the world. Um and a lot of that would have to do with you know our very expensive wages and we take a lot of we put a lot of emphasis on the people we hire and the quality of that talent. So it um it naturally is in retail operations a large focus in Australia. Um that graph on the right u obviously again touch on two key points there. We asked again retailers what strategies uh has your company implemented um and investing in employee training what what um strategies have you invested in to deal with the challenges that were in the graph on the left and the key one was investing in employee training and development. The second one they're investing in uh or enhancing company culture as the two main drivers and that's been that's consistent across the world. Where Australia is really interesting compared to the rest of the world is um implementing flexible work arrangements there where in Australia that's 30% verse 13% around the western world. Um you know that that's really interesting that in Australia that's a key a key focus for leaders. Um yeah and I guess that's got a lot to do with lifestyle here in Australia and the complexity of our um award system. Uh loyalty programs. So um thinking about we ask customers. So this graph um you know is a survey of customers uh and the influence of loyalty programs on the customer. Um the first two sets of information there compared to the second two sets are all about the benefits of loyalty programs. So, um, customers are increasingly saying, "It influences me to visit more often, and they're spend more. " Um, so loyalty programs are doing their job. They're getting better and are influencing CS customers more and more. Um, I would also say that reflects that the playing field has risen in terms of loyalty and what customers expect because if they're more effective, then it's obviously becomes a more cluttered space. jump on Josh. — And um just on that last point as well. So again, we know from research or RDG Insights research that um 97% of Australians are a member of a loyalty program in some way, shape or form. Um but again, over 70% of consumers are influenced by that loyalty program. But it's not the key aspect here is that when we consider loyalty programs, it's not a one-sizefits-all. You need to know about again who is your target customer? How do you want to build that relationship with them? How do you build your tribe to develop that loyalty? Because other than that, you're if you if we're not having that approach, it just becomes a case of giving money away, giving money away for very uh little return or that concept of they might come and shop with us again. — This next one, obviously, another survey of customers of what um you know, what is most important to you in terms of customer service and the number one thing that they said was friendly staff. So, um, you know, that's not surprising, but I think it's a great reminder of what's the most important thing for the customer, and that's having friendly staff. Um, so that comes a lot back to thinking about recruitment and who you're recruiting. And, you know, there are culture considerations when you're recruiting and there are capability considerations and I think thinking about the culture is a critical element when it comes to recruitment because that's obviously going to impact that top point there. Um the next five results there are all around capability. So can the staff answer my questions? Are they not salesy? And a lot of that comes back to training. So that's probably the key take out from that slide. But this is survey of retailers now. Um probably should have said up front guys, but um the red graphs are retailer research and the blue graphs were — customer research, which is so that just why I keep reiterating who what the research is about. So this particular set of research is um a survey again of retailers um and the key training challenges. Um the biggest challenge for retailers in training is time constraints. So that's the time for the staff to conduct the training and that's the availability of um time to develop the training. That's the number one constraint. Um the second um issue is employee engagement. And the third uh challenge is ROI and the cost of training. I think that the takeout from

that is that um if time is the main issue that training has to be exceptionally effective because if you're going to if that time is going to be an issue that when you actually do it that it actually is value ad. So I think that's the key takea from that. — Yeah I thought from the previous slide too it's worth saying that there was high cadence amongst — uh customers who wanted friendly staff. Absolutely agree Dean but they also wanted them to be well trained. So those two together were the by far the dominant customer expectation. — Uh and that's been consistent over the years. — On this next one, uh again retailers were surveyed on um you know how do you believe what do you believe your current training programs are in achieving their objectives. Um so the effectiveness of training programs and what they use for that. So customer feedback is the number one source of determining the effectiveness of training. um and retail doctor group do work with clients on customer surveys and use that uh in a leaderboard to determine um the effectiveness of training. So that's something that we do a lot here at retail doctor group and I think the research kind of shows why we do that because that's the number one feature. The next few things there around sales growth, reducing staff turnover, customer engagement, I think all that stuff is um obviously other ways to measure staff training but the key one is customer feedback. Um and yeah, so just to sum it up, I think um you know, over half of retailers say that they are customer focused. That was interesting. Um leaders are addressing their skill shortages um through optimal training and enhancing company culture. I mean, just to give a shameless plug to what we do at Retail Doctor Group, you know, we don't uh we have a training division or a separate uh sister company that does training. Um but you know, for us, it's not about the training. There are a lot of training organizations out there. It's about a full loop and effect having effective training. So, you know, we have dashboards for retailers that show not only what's completed in terms of training, but um how effective that training is, what the mystery shop scores. We have a dashboard that shows the full loop and then that leaderboard um can be used internally to reward and recognize retailers that or stores within the network that have effective training and have effective results to complete the loop with effective training. And that's something that we do and something that we're very proud of because I haven't seen with all the retailers I talk to in the market. It's not a dashboard I see very much. And um it it actually is a bit of a it is it's a gap I think that retailers aren't are typically having training and measuring whether people are doing the training but they're not um doing the next steps which is measuring um the mystery shopping against that training measuring the customer surveys against that training and then updating their training to reflect the results that come out of those um measures. So that's um something we do and if anyone wants to talk about it, come and talk to me and happy to chat more about that. — Wonderful. Thanks, Steve. — Okay. And just for a quick run through of our last section and we'll wrap it up in the next three minutes. — I'm going to do this in 30 seconds because it's all in the paper. Uh but essentially what we're seeing is that global retailers are showing us some confidence. Uh and we're seeing that displayed and we saw that in the domestic macroeconomics. So I think we're seeing generally speaking cautious confidence is the way I would describe it with a greater focus on profitability out of operations. So uh I thought that was some good positive signs there subject to Mr. Trump's tariffs and anything else that can go on globally. Um and again this slide reflects that domestically. I think this is a good lookout for boards, a good slide for boards to be thinking about um stewardship, governance, the way that they're working with their executive teams to understand consumer confidence or otherwise not only in the industry but their categories. Uh talent and labor the main areas where Australian retailers and generally speaking are facing scarcity. So acquisition strategies have to be very deliberate was touched on. So too does retention. Uh and we're seeing a breadth of new skills being required notably technology, AI and so forth. Um what we also saw was shortages in financial resources and logistics were also callouts around the people and around planning. So for this section really as I've touched on cautious optimism is probably a nice way of saying it. Um, we do understand and see from even this work this need for retailers to continue to dive into understanding their customers at a deeper limbic type emotional level and building very segmented models in all the ways they go to market through product through to AI enhancement. Uh, everything old is new. Again, the real focus on people in retail training

effectiveness, which was nicely covered by Dean, uh is really showcasing the focus in on our people in retail, the human experience of retail. Um and of course, we certainly see the winners as the most adaptive, agile, fastest to market, innovative, and certainly understanding customers at a very deep level. um and being provided and spending their capital wisely and their operational expenses efficiently. And so in our 2030 program working with our clients, we see this high proponents of understanding from leaders that their business requires change in a changing context. — We serve that need as well in one of our programs called the 2030 program. So please feel free to get in touch with myself, Josh or Dean and we'll take you through that. Other than that, ladies and gentlemen, on behalf of uh Dean, who's just who's joined us recently, did a great job today. Thank you, Dean. Uh and Dean heading up our knowledge management, our training and learning, a lot of the work we're doing with clients in that space and across all our operational programs. Josh, as head of insights, thank you very much for bringing this together. your insights and commentary. as head of consumer insights and our operations. And I'm Brian Walker, founder and CEO of Retail Doctor Group. It's a delight to bring this work to you and we thank you for attending. I think Josh, you mentioned that you'll be sending this work out to whoever would like it, download it. Yes. So, we'll um we will be popping this on our webs the next couple of days and obviously uh as attendees for this webinar. We will provide you with an exclusive um exclusive download as well. So, keep an eye on your inbox and it'll be with you in the next day or so. But other than that, thank you very much for everyone. Thank you again, Brian. Thank you again, Dean. And also, thank you to the wider retail doctor group team, including Renee, to help bring everything together. And obviously thank you to um those that have attended and look forward to seeing you all in future events — and our friends at Lightseed. Thank you everybody.