Australian retailers are operating in an environment where resilience, execution and the ability to create sustainable value are becoming increasingly important.  

The businesses best positioned to navigate this environment are those that have built clear customer differentiation, supported by the operational capabilities needed to deliver consistently.

That’s a key theme emerging from Grant Thornton Australia’s 2026 Retail Dealtracker research, which analysed 139 retail transactions to December 2025.

The second in a series of e-books based on the research points to five characteristics increasingly associated with stronger-performing retail businesses. These characteristics can help businesses perform consistently under pressure, and – where well developed – contribute to stronger market positioning, competitive advantage, scalability and strategic options over time:

Brand strength and pricing power

Brand differentiation is becoming an increasingly important driver of business value, with pricing power, customer loyalty and strong ecosystems supporting more resilient earnings.

Kirsten Ridgway, Partner – Management Consulting at Grant Thornton Australia, says execution is often the biggest differentiator between retailers that build resilience and those that struggle to maintain performance.

“Many retailers understand their customers and strategy, but the businesses pulling ahead are those with the operational capability to respond faster and adapt more effectively. That might mean better use of data, stronger supplier partnerships, more efficient processes or clearer decision-making,” she explains.

Businesses with strong customer relationships can be better positioned to generate more durable earnings because customers return by choice rather than by default. For example, Quad Lock demonstrates this through its direct-to-consumer model, which accounts for 75 per cent of revenue, while Laurent Bakery’s $650 million acquisition by Bridor reflects how differentiated, difficult-to-replicate market positions can contribute to business value.

Earnings quality and margin discipline

Strong financial performance is measured not by revenue growth alone, but by a retailer’s ability to consistently convert sales into sustainable earnings. EBIT margins highlight the strength of a retailer’s pricing strategy, cost control and operating model. 

FY25 results showed a widening performance gap, with Lovisa delivering an 18.9 per cent EBIT margin compared with 16.3 per cent for Harvey Norman, 10.6 per cent for Adairs and 4.5 per cent for Myer, highlighting how factors such as pricing discipline, cost structure and operating model effectiveness can influence performance alongside sector dynamics.

Margin pressure was influenced by sustained discounting, with promotional activity placing pressure on earnings while fixed costs remained relatively unchanged. Growing shrinkage also added pressure through higher inventory losses and security costs. Together, these trends highlight the importance of disciplined pricing, cost control and margin management in support of long-term retail resilience.

Vertical integration and supply chain control 

The Chemist Warehouse and Woolworths transactions, both referenced in the first e-book, illustrate the strategic role that vertical integration and supply chain capability can play at scale. The deeper question for most retailers is not whether to replicate those models, but whether their own business has procurement relationships, supplier agreements, or distribution capabilities that strengthen efficiency, resilience, scalability and competitive positioning.

Vertical integration can create value through greater control and visibility over the supply chain. By managing more elements of sourcing, production or distribution, businesses can improve visibility, better understand where value is created, and respond more effectively to changing market conditions. 

For retailers, building these capabilities can support more efficient operations, greater resilience and the ability to scale without adding disproportionate complexity.

Building capability, not complexity

Technology and AI can create significant value when they are embedded into a retailer’s operating model rather than treated as standalone investments. The key question is not how much a business spends on technology, but whether it strengthens customer relationships, improves decision-making and drives greater operational efficiency.

Peter Thornely, Partner – Financial Advisory with Grant Thornton Australia, says retailers looking to scale need to focus on more than just growing sales. “It requires a business model that can handle greater complexity while maintaining customer experience, operational control and profitability.”

Retailers that use technology to better understand customers, improve forecasting and inventory decisions, and connect digital and physical channels more effectively can strengthen execution across the business. 

When technology is embedded into the operating model, it becomes a capability that supports performance, scalability and long-term value creation. When treated as an isolated initiative, it risks adding complexity without strengthening the underlying business model.

A framework for building long-term retail value     

Building these capabilities is not about pursuing a single source of advantage, but understanding how they reinforce each other over time.

A clear customer proposition provides the foundation. Businesses that understand why customers choose them are better positioned to build differentiation, loyalty and sustainable growth. From there, capabilities such as earnings discipline, supply chain resilience and technology-enabled decision-making help businesses protect margins, improve execution and scale more effectively.

Ridgway says retail leaders who want to increase the long-term value of their business need to focus first on the customer. 

“The businesses that create sustainable value are those with a clear understanding of who they serve, what makes them relevant, and why customers choose them over alternatives. When retailers build genuine differentiation and consistently deliver on their customer promise, they create stronger loyalty, more resilient revenue and greater strategic options over time.”

• For a deeper understanding of the capabilities that help retailers build resilience, strengthen performance, and create long-term value, download the second e-book here.