Retail

Will Amazon kill local retailers? Maybe not, but these three things could

Emma Koehn /

This festive season marks the first time Australian shoppers will have access to a local Amazon offering, but is this a death knell for other, smaller brands?

Over the past year SmartCompany has been checking in with the experts as major local brands collapse and others prepare themselves for the future of near-instant delivery.

While everyone acknowledges Amazon will change the game, few think it will kill competition in the sector entirely. Beyond Jeff Bezos’ company, experts say there are a few key areas where local incumbents should tread carefully, or face challenging sales climates. 

Here are three of them:

1. Expectations on delivery

While Australian shoppers currently only spend a fraction of their spending online, this is changing fast. As customers get more familiar with delivery models for food and consumer goods, they will come to expect this across all retailers — and retail strategists say those who fail to move will be left in the dirt.

It will move from price wars to time wars. If Amazon can win on price, they will, but it will be about getting things to the customer the fastest,” associate professor at Queensland University of Technology Business School Gary Mortimer said earlier this year.

2. A failure to focus on personalisation

Services like Amazon Prime have been praised because of their predictive nature, where the system can easily facilitate purchases for a customer based on what they’ve wanted before.

Retail strategists have told SmartCompany personalisation of both product and service will become the norm, making it critical that smaller players come up with ways to connect directly with shoppers on a personal level.

Along with a personal connection, international companies are also leveraging Australians’ love of exclusivity. When British footwear retailer JD Sports launched earlier this year, experts told SmartCompany it would focus on providing lines of product that no other Australian company had access to.

“It’s all about the brands,” strategist at Retail Oasis Pippa Kulmar said in March.

3. A focus on one type of customer

Administrators overseeing a number of high-profile retail collapses have reported local brands have struggled with cashflow issues off the back of poor sales, when shoppers have not engaged with the companies as expected.

When discussing these collapses, experts have said many local brands have been too scared to diversify away from their core customer bases of decades past — and this has hurt sales.

“There’s a lot of brands that have been unable to work out where they belong,’ Kulmar said of the collapse of fashion brands Marcs and David Lawrence earlier in 2017.

With the likes of Uniqlo and H&M now finding a rhythm after more than two years in the local market, it is critical bricks-and-mortar stores think beyond the customers they currently serve and consider reaching new demographics, experts say.

Retail businesses have also been warned that Amazon or no Amazon, Australian shoppers will not stay loyal to the local brands, but to the idea of convenience above all else.

Often when people are asked questions like this, they draw on their previous experience with a service or brand. Until Amazon arrives, we don’t know what their Australian offering will be like,” professor of marketing and consumer behaviour at Deakin University, Paul Harrison, said earlier this year.

“We don’t know what we’re weighing it up against, and convenience will always be a strong factor in consumer preference.”

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Emma Koehn

Emma Koehn is SmartCompany's senior journalist.

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