Many retailers in New Zealand have spent the last few years chasing gross sales growth: More channels, more AI pilots, more loyalty features, more delivery options. But retail industry expert and iMedia keynote speaker Anthony Mittelmark says the focus should be on selective growth with economic discipline.
“Selective growth asks: Which growth initiative should we prioritise? What are we currently funding that’s destroying the margin?”
The problem, he argues, is that most leadership teams simply do not have the visibility they need into customer, product and channel profitability to answer those questions.
“Most New Zealand retailers I talk to think they’re being strategic about growth, but they’re actually being tactical about activity,” he says. “So they’re going all in on AI. They’re focusing on loyalty and delivery. They’re doing channel expansion, but they never know if you ask them simple questions like, ‘Which channels yield best, and where do you have your lowest cost of acquisition?’ They don’t often have the answers.”
For Mittelmark, the real shift ahead is about moving from random activity to profit clarity, an idea he will unpack at iMedia Retail Summit in Christchurch in May.
“Growth is the only path to sustainable competitiveness in a structurally constrained market. But the path to that growth is through ruthless financial discipline.”
The local advantage in a global fight
Accepting that reality will arm New Zealand retailers to sustain pressure from multinational platforms with deep pockets and powerful AI, he believes.
“New Zealand retailers are up against global retailers that have a lot of advantages, yet New Zealand is a structurally constrained market.” Global players benefit from superior AI capabilities, lower acquisition costs, more advanced personalisation, and the advantage of generative AI search – combined with procurement scale that allows them to buy and price essentials in volumes that locals cannot match.
That makes it very hard to compete in essential categories, he says. “Not only do these companies have the AI advantage, the cost of acquisition advantage, the personalisation advantage, the advantage with Gen AI search, but they’re buying all this stuff that they sell in volumes that you will never be able to underprice them on.”
Yet he believes the giants cannot easily copy New Zealand retailers’ advantages: Speed, proximity and context.
“You can’t outspend the global retailers. However, their scale creates decision latency and organisational drag, algorithmic rigidity, which is your advantage as a New Zealand retailer,” he argues.
Local operators can move faster, closer to customers, and with a better understanding of cultural nuance.
“While some of the global scale will work in the New Zealand market – essentials and undifferentiated electronics, for example – the stuff where context really matters, where it is consumer specific to New Zealand, is where local retailers have an advantage. And they don’t need to spend a lot of money trying to copy the playbook of the global retailers.”
He also questions whether multinationals will ever fully tune their models to this market.
“Local retailers have an advantage they should sharpen before global players investing in New Zealand build enough contextual knowledge into their models to become super effective. However, that may never happen because there may not be enough data depth in the New Zealand market to get that model clarity.” And why would you spend the money to get the clarity in a small market like New Zealand if you just compete on essentials, with low margins, he asks.
That creates what Mittelmark describes as a calibration window of 12–18 months whenever a global player decides to optimise for New Zealand. During that time, human judgment and economic discipline can still outperform algorithmic optimisation.
From tactical AI to profit AI
Mittelmark is no technology sceptic. A fractional CTO and AI strategy leader with more than 20 years of experience in enterprise technology and digital transformation, he advises ASX 100 companies and high-growth ventures on AI-enabled competitive strategy. He embraces AI, but he is blunt about how it is currently being deployed.
“After several years of funding gross sales growth initiatives without clear profit visibility, many retailers are discovering their AI investments, loyalty programs and channel expansion efforts are destroying margin faster than creating value,” he says.
So, he advocates using AI to improve profitability, not engagement.
“Your views, your clicks are no longer a metric. Conversion is the metric, and conversion only matters when you have margin right, and with margin compression, you have got to be really selective.”
So where should leadership teams focus when considering AI investment? Fraud returns prevention, inventory carrying costs, and the cost of acquisition optimisation for starters, he says.
“The key metric should be return on investment. Not a vanity metric, like how many hits you got, or how many pages were visited during a user session; or the duration of the session on the website,” he continues. “Someone spending 10 minutes on a site does not help with profitability – and especially with competing against the multinationals who have really great AI capability. You have got to be very focused on what drives profitability.”
He also urges New Zealand retailers to learn the market as a human team before implementing AI. “You can’t hope that AI is going to give you any huge advantage, because one, the data that you carry is probably not deep enough, and two, almost all those AI tools will work on the least profitable things you sell. But there may never be enough data to make them profitable.”
The ‘no discipline’: What you stop doing
In Christchurch, Mittelmark will expand on what he calls the “no discipline” – knowing when to say no.
“There are tonnes of AI available that will not add any value to your business,” he warns. “Here’s why judging what you stop doing is more valuable than judgement about what to prioritise. It’s about discipline.”
He offers a set of behaviours that should be under immediate scrutiny:
- Free-delivery promises that destroy margin and loyalty.
- Points tiers that subsidise behaviour that you already own.
- Assortment breadth that creates inventory costs without sales velocity.
- Complex personalisation or multi-tier, multi-modal loyalty that adds cost and complexity more than value.
- AI implementations “that look progressive but erode profitability” because they drive traffic beyond what the rest of the experience can support.
For Mittelmark, one question is at the core of the conversations now shaping senior leadership thinking in New Zealand retail: “Where do I have defensible competitive advantage?” His answer: “Speed to profit. So speed is really important. You are winning because you are making decisions faster than these big multinationals, who have scale, but their decisions are slow.”
In an environment where AI is everywhere and margins are constrained, leadership will be defined not by the number of tools adopted, but by the discipline to decide what to stop, when to say no and where AI genuinely sharpens the choices that matter.
