The huge retail trend many are missing

There were a couple of retail trends laid bare this week.

Neither is particularly surprising, for those who’ve been keeping an eye on the market… but they are stark and likely to continue to be impactful. And they’re inextricably linked.

Let’s start with the topline numbers.

Woolworths Group Ltd (ASX: WOW) released its third quarter sales, which included 5.9% growth for the Australian supermarket business). A pretty good result, continuing its good form from the previous quarter, but the company flagged an earnings downgrade due primarily to increased fuel costs.

Amazon (I own shares, for the record) Australia’s 2025 retail revenue hit $4.8 billion, up 25%. Interestingly, that’s a minority of the company’s overall Australian revenue, eclipsed by the remainder of its business (primarily Cloud computing, advertising and Prime subscriptions).

McDonald’s Australia did $7.5 billion in sales in 2025, up 7%.

And David Jones sold $2 billion worth of merchandise, but that was down 8%, and the company reported an almost-$100 million loss.

Those are each really interesting numbers, I reckon, for lots of company specific reasons. 

Just the fact that Amazon’s retail business is the minority of its local revenue is fascinating (and a reminder of the growth of cloud computing in general and AI in particular). And the ongoing tussle between Woolies and Coles is always interesting to watch.

But, with the exception of Amazon (for reasons that will soon become clear!), the topline numbers aren’t the key story, I don’t reckon.

What’s fascinating to me is the ongoing surge of ecommerce. And I think many investors are still missing it.

Let’s look at each of those companies.

Woolworths’ online sales grew by over 20%, more than three times the almost-6% in total revenue growth.

Macca’s home delivery sales – through the company’s own app and other delivery apps – topped $1 billion – essentially $1 in every $7.

Amazon’s sales are obviously all online, but 25% is impressive growth on an already-massive base.

And while DJs sales fell 8%, the company’s online sales were up 10%.

Stating the bleeding obvious, online sales are growing in total, but are also growing strongly as a proportion of sales for those companies with a ‘bricks and clicks’ channel mix.

Now, it’s certain that the strong growth across each of those companies’ online operations will moderate at some point. But it could run at these or similar levels for a long while yet.

Why?

Well, online sales are starting from a low base, and so can grow at decent rates for a while; as total multichannel sales grow, and as online cannibalises physical retail.

And not just those companies’ own physical retail… but the retail business of those competitors who can’t, won’t or don’t manage to make that transition as successfully as others.

The impacts? They’re impossible to forecast exactly. But I think we can take a decent swing at the likely directional impacts.

We’ve already seen some predominantly or solely physical retailers go to the wall. Mosaic Brands, the parent of Millers, Rockmans, Noni B, Rivers and others, is probably the clearest example. Godfrey’s, Barbecues Galore and this week bedmaker A.H. Beard are all likely to have fallen victim – in large part, though not entirely – to this broader retail trend.

Speaking of which, I think it’s very likely that both Myer and DJs, which are sailing into stiff headwinds anyway, would have probably gone very close to collapse long before now had they not been able to secure a very decent slice of their sales through their respective websites.

(If I was to grab a crystal ball, I suspect that in a decade or so if they’re still around, they’re predominantly online businesses with a handful of CBD stores.)

And for investors?

If I’m right about the trend, the opportunity is to identify which businesses are winning, and likely to keep winning, the online race.

If they do, they’re likely to be able to grow above the market growth rate by winning online and taking sales and customers from other retailers.

I would also suggest it’s worth thinking about the end result, rather than the short term. That is, if I’m right about the end stage, companies investing now (and making less money for a while) to put themselves in a better place as that end result plays out, might be cheaper than they appear.

Real estate? I wouldn’t want to invest in mid-tier retail real estate for quids. The big ‘destination’ centres will probably be okay. The local shopping centres will be fine for now, but bear watching if/when some individual stores become unprofitable as more shopping goes online. But the mid-tier stuff, that is neither a destination, nor local? That feels really risky to me.

And the pure-play companies? If those trends above are right, and the online-only mobs can stay relevant (not something we should just assume, of course), they could have a long runway ahead.

Ecommerce has been around for a while. It’s easy to take it for granted. But I think it has a long way to play out.

1,000 reasons to celebrate!

It occurred to me the other day that I probably don’t talk about the Motley Fool Money podcast enough. Hopefully you already know about it (and hopefully you’re already listening!).

And if you don’t? Well, today might be a good time to start – because today is something of a milestone.

This afternoon, at 4.30pm AEST, we’ll publish our 1,000th episode!

Back in 2016, I got a call from Triple M, asking if we’d ever considered a podcast. Everyone is doing them these days, but back then it was a pretty new thing. Frankly, we hadn’t thought about it, but we were happy to give it a go.

(And do me a favour: please don’t go and listen to those early episodes! I haven’t relistened to them, either, but I’m pretty sure I’d be horrified!)

For some reason, Triple M liked that first episode enough to let us keep going (or perhaps just didn’t have a better option?). We’re now part of the LiSTNR podcast stable, a sister brand to Triple M.

Over the past 10 years, the podcast has ebbed and flowed, with my original co-host, Andrew Page, departing and then rejoining me, and the pod expanding to a couple of core episodes  a week – our ‘regular’ Friday episode, and our originally-extra-but-now-permanent Sunday ‘mailbag’ episode.

But it’s not really about us. I wanted to thank those of you who listen regularly (more than a few of you ever since Episode 1!). You suffer our in-jokes and quirks gladly, and we really love hearing from you with questions, suggestions and even the occasional disagreement.

We hope we return your loyalty with a combination of fun, education and investing news and views.

If you’re not listening yet, why not tune in and see what you’ve been missing?

It’s free, it’s capital-F Foolish, and I hope it’ll be a regular companion to your Motley Fool membership or readership.

You can find it on iTunes, Spotify, the LiSTNR app or wherever you get your podcasts!

Here’s to the next 1,000! 

Fool on!

The post The huge retail trend many are missing appeared first on The Motley Fool Australia.

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Motley Fool contributor Scott Phillips has positions in Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2028 $320 calls on McDonald’s and short January 2028 $340 calls on McDonald’s. The Motley Fool Australia has positions in and has recommended Woolworths Group. The Motley Fool Australia has recommended Amazon and Myer. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.