As the rumoured arrival of Amazon hangs over the heads of many Australian retailers, experts and analysts have labelled 2017 a “fascinating” year for retail.
A Deloitte report has revealed 39 of the top 250 global retailers now operate within the Australian market, and more are on their way.
UK department store retailers John Lewis and Debenhams have recently expanded down under via partnerships with Myers and Harris Scarfe, and US retailer The TJX Companies recently acquired 35 retail sites from clothing retailer Trade Secret.
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Online retail giant Amazon has not made its debut as of yet, but it looks like it’s preparing to, listing over 100 jobs within IT, marketing, HR, and sales, reports news.com.au.
Some of the jobs advertisements mention Amazon Fresh, the company’s door-to-door grocery delivery service. The ads also come in the wake of the company lodging over 250 trademark applications in Australia last year.
“There will be pressure”
Retail expert at Retail Doctor Group Brian Walker tells SmartCompany retailers will need to be “sharper and fitter” in preparation for the influx of global retailers.
“In the next three to five years, the vast majority of the top 100 retailers will have a bricks and mortar presence in Australia,” Walker says.
“This will either be through standalone stores or structural partnerships such as Debenhams and Harris Scarfe.
“There will be pressure.”
Walker believes most sectors of retail will be challenged in the coming years but highlights women’s fashion, fast fashion, sport and leisure, and lifestyle and homewares as main areas for disruption.
The supermarket and grocery sector will not be exempt either, with Walker warning that Coles and Woolworths should be looking over their shoulder.
“In the supermarket sector, we’ll see more competition rather than less. Aldi’s sibling Lidl is coming, and it will be a very aggressive player,” he says.
Lidl is a discount german supermarket chain in a similar vein to Aldi, and reportedly is actively working to enter the Australian market.
“You only have to look at the success of Aldi to see Lidl’s will be very similar. The dominant incumbents of Coles and Woolies will have their market share diluted,” Walker says.
Amazon to compete with high margin businesses
As for Amazon, Walker predicts the giant will claim anywhere between 5-10% of the retail market within the next five to ten years. He says the retailer will “directly compete” with high margin businesses like giftwares and baby wares.
However, he believes retailers down under won’t give up without a fight, provided they prepare correctly.
“Retailers have to focus on their operating strategy and carefully consider their uniqueness. You have to have a point of difference,” he says.
National leader of Deloitte’s retail and wholesale distribution group David White highlighted Amazon’s potential for disruption is huge in a statement.
“We are already seeing several retailers setting up task forces to assess the potential impact of an Amazon market entry, but it’s not yet clear what exactly the company has planned for Australia,” White said.
“If Amazon isn’t on the agenda at board meetings for Australian retailers, then it should be.”
The only two Australian companies to make it into Deloitte’s top 250 list of retailers are supermarket giants Wesfarmers and Woolworths, coming in at number 21 and 24 respectively.