Brick and Mortar in 2025: The Future of Physical Businesses in Australia

The digital revolution has reshaped the Australian business landscape, but brick and mortar enterprises are far from obsolete. As we head into 2025, physical storefronts are experiencing both new challenges and surprising opportunities. So, is investing in a brick and mortar business still a savvy move? Let’s unpack the latest trends, financial realities, and strategies for success in the evolving Australian market.

2025 Market Trends: Physical Retail Isn’t Dead, But It’s Different

While e-commerce continues its meteoric rise, brick and mortar stores are adapting rather than disappearing. According to the Australian Bureau of Statistics, physical retail still accounted for over 70% of total retail turnover in late 2024, though the gap is narrowing as online sales grow by double digits year-on-year. The big difference in 2025? Consumer expectations have shifted:

• Hybrid Shopping Experiences: Australians increasingly blend online research with in-store visits, expecting seamless click-and-collect and real-time inventory updates.

• Experiential Retail: From pop-up collaborations to in-store events, retailers are turning their physical spaces into destinations, not just shops.

• Local Loyalty: The post-pandemic “shop local” movement remains strong, with neighbourhood stores capitalising on community connections and ethical sourcing.

Large shopping centres are pivoting, too, with Westfield and Vicinity Centres investing heavily in mixed-use developments—blending retail, hospitality, and even residential spaces to future-proof their assets.

Financial Considerations: Risks, Costs, and Cash Flow in 2025

Running a brick and mortar business in 2025 comes with higher stakes—and potentially higher rewards. Key financial realities include:

• Rising Rents: CBD and high-traffic suburban leases have crept up post-pandemic, though some regional and fringe areas offer more accessible rates.

• Energy Costs: With Australia’s energy market in flux, businesses are investing in solar panels and energy-efficient fit-outs to cut overheads and qualify for government incentives.

• Staffing Challenges: The tight labour market means higher wages and greater competition for skilled workers, especially in hospitality and specialty retail.

• Upfront Investment: Fit-out costs, inventory, and compliance expenses (like accessibility upgrades and digital POS systems) can be steep. Many owners are seeking asset finance or SME loans, with flexible repayment options now more common thanks to fintech lenders.

On the upside, the 2025 Federal Budget introduced new tax write-offs for small business capital investments, and several state governments are offering grants to revitalise local shopping strips and encourage main street vibrancy.

Strategies for Thriving: How Savvy Operators Are Winning

The winners in 2025 are those who blend digital savvy with a strong physical presence. Here’s how leading brick and mortar businesses are future-proofing:

• Omnichannel Integration: Linking inventory, customer data, and marketing across online and offline channels to create a seamless experience.

• Data-Driven Decisions: Using real-time sales analytics, foot traffic counters, and customer feedback apps to adapt quickly to trends.

• Flexible Formats: Pop-ups, kiosks, and shared retail spaces lower entry costs and allow brands to test locations or concepts without long leases.

• Community Engagement: Partnering with local producers, running workshops, or hosting neighbourhood events to drive loyalty and word-of-mouth.

For example, Melbourne’s ‘The Boroughs’ collective—an independent retail hub—has thrived by curating local makers, rotating pop-up tenants, and offering in-store events that simply can’t be replicated online. Similarly, large chains like Bunnings continue to dominate by offering hands-on workshops and expert advice, reinforcing the value of physical presence.

Is Brick and Mortar Right for You?

Despite digital disruption, brick and mortar businesses remain a cornerstone of Australia’s economy—especially for entrepreneurs who can adapt quickly and offer something truly unique. With smart financial planning, creative use of technology, and a focus on customer experience, physical stores can still deliver robust returns in 2025 and beyond.