Poor service could cost Australian retailers AUD $66 billion

Australian businesses risk losing up to AUD $66 billion in sales this peak shopping season as consumers reduce spending following negative customer experiences, according to new research by the Qualtrics XM Institute. The findings come as Australians are forecast to spend a record AUD $6.8 billion over the Black Friday and Cyber Monday weekend, which marks a key period for many retailers.

Consumer reactions

The research shows 41% of Australians will cut back or stop spending with a company after a negative encounter. Pricing issues are the most cited reason that drives customers away, identified by 46% of respondents. Communication failures and problems with service delivery are also significant, each influencing 42% of consumers. Product quality concerns affected 34% of those surveyed.

"With shoppers actively waiting for big sales events like Black Friday to make larger purchases or tackle their Christmas shopping, businesses can't afford to let poor experiences undermine such a critical window," said Ivana Papanicolaou, Head of Customer Experience Solution Strategy, Qualtrics.

The study highlights that pricing concerns such as unexpected fees, inconsistent discounts, or perceived poor value can immediately erode customer tolerance and prompt shoppers to look elsewhere.

Silent feedback loop

Nearly a third of Australian consumers (31%) do not report negative experiences to companies or publicly, and 27% remain silent about positive experiences. This trend makes it more challenging for businesses to address the causes of dissatisfaction, as problems often go undetected until sales are affected. The issue is heightened as more companies turn to AI-powered customer service tools, which may not fully capture silent customer sentiment.

According to Qualtrics' 2026 Consumer Experience Trends Report, almost one in five consumers who used AI for customer support saw no benefits, a rate approximately four times higher than in other AI use cases. The research warns that poorly implemented AI solutions may drive customers away during peak season instead of resolving their problems.

"Rather than solving problems during the busy peak season, poorly deployed AI risks create more frustrated customers who simply take their business elsewhere," said Papanicolaou.

Vulnerable sectors

The report identifies online retailers, credit card providers, and department stores as the sectors most exposed to risks from poor customer experiences during the busy seasonal period. Online retail faces the highest vulnerability globally, with 58% of consumers indicating they would cease or reduce spending due to a bad experience. This is followed by credit card providers (56%) and department stores (53%).

Risk mitigation

To mitigate the risks, Qualtrics recommends giving more authority to frontline employees to resolve customer issues, particularly when demand surges. The research suggests that understanding peak-season expectations and proactively defining excellent service for these critical windows can help businesses retain customers and protect revenue.

Viewing customer experience as part of financial risk management is also advised, given the significant value at stake for retailers and service providers during this trading period.

"Customer experience isn't a separate initiative, it's a fundamental business discipline that directly impacts revenue," said Papanicolaou.