When Reserve Bank of Australia governor Michele Bullock left the podium at the RBA’s Chifley Square HQ on September 29, she’d spent the previous hour fielding questions about the highest interest rate in 15 years. 

‘Poorer’. ‘Hurting’. ‘Hard done by’. Those were just some of the words the governor used to describe an announcement that will be felt at dining tables and boardroom tables across the country. 

Then just 48 hours later, inflation climbed to 4%.

Layer sluggish economic growth and rising unemployment on top of that, and it’s not hard to see why consumer confidence this week fell to the lowest level since the recession of the early 1990s.

In this week's Delivered, we unpack what four rate rises this year mean for peak season and the discounts associated with it, and ask: is discount-seeking a phase Australians snap out of, or a permanent feature?

TL;DR

• Four rate rises in 2026 have added about $460 a month to an average mortgage, with nearly a third of mortgage holders now considered financially ‘at risk’
• Three in four Australians say cost-of-living pressures are changing their shopping behaviour, with many seeking discounts or frequenting value-focused brands
• Retailers are already feeling it, with leading brands saying rate pressure is reshaping how (and when) their customers spend

Economic pressures are taking hold

Four interest rate hikes in 2026 have added roughly $460 a month to repayments on the average $731,000 mortgage. Roy Morgan modelling estimates that about one in three mortgage holders (roughly 1.7 million people) are now financially ‘at risk’.

Those macroeconomic headwinds are impacting purchasing power - just as the peak season that Australia's retailers rely so heavily on arrives.

According to Deloitte’s Retail Report 2026, three quarters (77%) of Australians have changed their shopping behaviour under cost-of-living pressure. Two-thirds (65%) cite price as the main reason they switch brands. 

Retailers were already feeling it before last week’s interest hike, though.

During the ASX reporting season in August, Nick Scali reported store traffic had dropped by 15%. Premier Investments, owner of Smiggle, Peter Alexander, and Just Jeans, downgraded EBIT, and chairman Solomon Lew said conditions were “very challenging, in particular during the latter months”. JB Hi-Fi pointed to customers seeking value and shifting spend toward major promotional events.

And now, the biggest promotional events of the year are approaching.

The discounts and the discount-seekers

Retailers rank promotions as their second biggest investment priority in 2026, trailing only AI, according to Shippit’s State of Shipping Report. 

In 2025, retailers started sales activity, on average, 13 days before Black Friday. In 2024, it was just six days and in 2022 only three.

“Retailers have clearly adjusted to a longer promotional season, and are mixing their strategies to reduce their reliance on a highly-pressurised, highly-competitive four-day window,” Rob Hango-Zada, Co-Founder and Joint-CEO, Shippit.

The questions for retailers become: is discounting strategic, or a necessity? And is it a phase or the new normal?

“My biggest learning [from peak 2025] was how deeply entrenched value-seeking behaviour has become,” said Adrian Lemme, Director of Retail and Gaming Research at Citi Australia. “I expected a recovery in consumer spending to drive a shift back toward brands and away from value players. Instead, retailers like Kmart have gone from strength to strength. 

“Even as conditions stabilised, consumers didn’t trade up the way many anticipated. That tells me this isn’t just a cyclical response to pressure; value has become a structural preference. Price, perception of value, and trust now outweigh brand aspiration more than I expected.”

Value and discounts are different things

While Deloitte’s research showed cost-of-living pressures are taking hold, it also found that 70% of shoppers are willing to pay full price for the exact product they want.

“Being value conscious is not the same as being cheap,” Andy Crossley, Associate Director, Deloitte Access Economics, explains. “Product quality still ranks first in what matters most in consumer purchasing decisions, and shoppers remain willing to spend when they see a good deal.

“In this context, retailers need to provide a competitive offering, particularly in discretionary categories where consumers have greater flexibility and choice. Providing sustainable value will depend on disciplined margin management, efficient operations, and clear customer propositions.”

It’s easy to conflate value with discounts. Consumers may be more conscious of what they get for their money, without defaulting to the cheapest option.

The risk with discounting becomes trading volume for margin - and perpetuating a behaviour that is already deeply entrenched. Every sale trains shoppers to wait for the next one. When discounting becomes the only reason a shopper buys, it becomes the only lever you have left to pull. 

Loyalty gets harder to earn and easier to lose, and the behaviour retailers hoped was a temporary response to a hard year becomes a permanent one; a self-fulfilling prophecy that deepens one sale at a time.

“More consumers are now trained to buy earlier and exclusively on ‘deals’,” Rob continues. “The question is whether the deep discounts on sales that have been deferred or brought forward are sustainable for the long term.”

The answer isn't to view price as the only factor, and instead give shoppers more reasons to believe they're getting value.

So if price isn’t the only differentiator, what is?

When Shippit asked shoppers what actually decides where they buy online, cost-effective delivery topped the list at 40%, followed by faster delivery at 34%. During peak 2025, retailers that offered same-day or next-day delivery generated 3.5-4% more sales than brands that didn’t. 

“Independence and flexibility in your carrier network is no longer a nice-to-have; it's a competitive advantage. If CAC is the new rent, then delivery is the new checkout counter. That is the most important part of making a sale today.”

Take Baby Bunting, for example. Its FY26 result showed total sales up 6.5%, online sales up 16.7%, and profit up 33.9% on a record gross margin. Crucially, there was no downgrade, with guidance pointing to further growth in FY27.

That growth wasn't an accident, but a symptom of its focus on customer experience. 

Online sales climbed from 22.4% to 24.8% of total sales, a result the retailer attributes to its rollout of same-day and next-day delivery. And by activating 100% of its stores for online fulfilment within three months, it was able to reduce costs by $1.2 million.

Baby Bunting's growth shows that value isn’t just a cost consideration, and discounting isn’t the only avenue.

When Deloitte asked consumers what would encourage them to switch brands, faster delivery (38%) trumped better promotions (36%). Shoppers are signalling that they’ll buy the right product if the overall experience is a positive one - not necessarily the cheapest one. 

So whether the current focus on value is a phase or the new normal, the answer for retailers should be the same. Waiting for cost-of-living pressures to ease isn't a strategy, and neither is racing competitors to the bottom on price. 

The retailers best placed to win will be those that make customers feel they're getting more value through product and experience.