Australian Retailers Under Pressure from Temu & Shein Surge

Traditional Australian retailers are experiencing significant sales declines as ultra-low-cost, fast-delivery Chinese e-commerce platforms Temu and Shein rapidly gain traction among consumers, according to an investigative report by The Australian. Retailers cited plummeting key-season revenues, mounting operating cost pressures and an uneven competitive landscape driven by digital disruptors.

Many small and medium-sized bricks-and-mortar businesses say they cannot match the aggressive pricing and logistics speed of the offshore platforms, while larger retailers face declining foot traffic and rising vacancies in shopping centres. The retail upheaval is spilling into the commercial property market, superannuation sector and broader regional economies.

The Retail Decline at a Glance

A costume shop owner in Brisbane, Alfred Mercury of Janina’s Costumes, reported a 48 percent drop in Halloween sales year-on-year, citing Temu and Shein’s ultra-cheap product offering and fast delivery as key factors in the decline. “It’s absolutely destroying small bricks-and-mortar businesses and family businesses all across Australia,” Mercury said.

At a macro level, analysts at market research firm Roy Morgan estimate that Temu and Shein collectively added more than AUD 1 billion in annual sales in Australia, intensifying pressure on incumbent retailers. Retailers such as Mosaic Brands owner of Millers, Rivers and other chains have reported significant financial distress in this environment.

Competitive Displacement and Consumer Shift

Temu and Shein’s business models rely on ultra-low pricing, fast international fulfilment, and aggressive user acquisition via mobile apps and social media. This value proposition has resonated with Australian shoppers facing cost-of-living pressures and inflated retail prices.

In mid-2025 data, Temu’s Australian customer base grew by 24 percent to approximately 4.7 million shoppers, while Shein grew by 27 percent to about 2.6 million. Retail Asia+1 The numbers reflect a broader shift away from domestic retailers, particularly those unable to compete on price or delivery speed.

Retail-property advisors report rising vacancy rates in major shopping precincts as chains retrench, and landlords face increasing difficulty leasing space anchored by weakening tenancy pipelines.

Regulatory and Structural Concerns

Retail executives such as the CEO of Wesfarmers, Rob Scott, have publicly called for policy interventions, arguing the regulatory and tax frameworks favour overseas platforms and disadvantage Australian businesses. “Competition benefits business and customers, but when regulation and taxes unfairly disadvantage some businesses, it leads to higher prices and puts Australian jobs at risk,” Scott stated. The Australian

Issues raised include:

• The tax-status and duty obligations of offshore sellers.

• The speed and origin of delivery offering a competitive edge.

• Intellectual-property and knock-off concerns, especially in fashion.

• Long-term implications for domestic manufacturing and retail employment.

Implications for the Retail Landscape

The displacement of physical retail and rising online alternatives may have cascading effects. Analysts warn of:

• Greater risk of “ghost malls” as tenants shrink and closures rise.

• Negative impact on superannuation funds that own retail property assets.

• Reduced diversity in brand offerings and diminished Australian design/manufacturing presence.

For Australian retailers to remain viable, they will need to rethink value propositions beyond price emphasising local supply chains, experiential retail, trusted brands, fast fulfilment and digital engagement. Retailers that lean heavily on discounting risk being squeezed between ultra-cheap global platforms and cost-conscious domestic players.

Sector Outlook

The report posits that unless adjustments are made by both industry and policymakers more store closures are likely. Small retailers, in particular, will continue to suffer without support in areas like logistics, returns management and online competitiveness.

Meanwhile, large-scale Australian retail groups are under pressure to accelerate omni-channel integration, streamline operations and reduce reliance on large-format stores. For the fast-growing Chinese platforms, growth is likely to continue but may invite regulatory scrutiny, especially around local fulfilment claims, import duties and consumer protections.

Conclusion

The rise of Temu and Shein in Australia is not simply a retail trend but a structural shift. Established retailers are being forced to compete against platforms that combine global scale, low pricing and high convenience. The result is a challenging outlook for bricks-and-mortar retail, local brands and retail property owners.

As one retailer put it bluntly: “How can the Australian government keep this open playing field fair?” The question underscores the urgency for strategic adaptation across the sector — and for policymakers to consider the wider implications of rapid global e-commerce growth on domestic industry.