Australian retailers: underestimating an amazonian impact?

22/06/2017

The recent arrival of T.K.MAXX signals only the first of a series of seismic shifts on the way for the Australian retail landscape, most notably the impending arrival of online retail behemoth Amazon. Carat’s Head of Innovation, Robert Tilt, wants brands to have a plan in place, not just to defend themselves against ‘the Amazon effect’, but to capitalise on it.

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It shouldn’t come as a surprise to anyone that our local retail landscape is on the verge of drastic disruption.Discount retailer T.K. MAXX opened its doors in Australia only a few short weeks

Discount retailer T.K. MAXX opened its doors in Australia only a few short weeks ago, and already has announced plans to open 35 additional stores by the end of the year. The other elephant in the room, Amazon, isn’t even here yet, and its presence is already being keenly felt. Or so we thought.Apparently not, however, according to a recent retail insights report, ‘Innovation in Retail’, from The Commonwealth Bank.

Apparently not, however, according to a recent retail insights report, ‘Innovation in Retail’, from The Commonwealth Bank.When surveyed, only 11% of Australian retailers classified Amazon as a ‘significant threat’, with 49% declaring themselves ‘unfazed’. Even more alarmingly, it revealed that the majority don’t have a plan in place to combat Amazon when it arrives on our shores. Of the 70% of retailers who were actually aware of Amazon’s impending arrival, only 14% had a formal plan in place to effectively compete.

When surveyed, only 11% of Australian retailers classified Amazon as a ‘significant threat’, with 49% declaring themselves ‘unfazed’. Even more alarmingly, it revealed that the majority don’t have a plan in place to combat Amazon when it arrives on our shores. Of the 70% of retailers who were actually aware of Amazon’s impending arrival, only 14% had a formal plan in place to effectively compete.That’s when I start to sweat. See, unfazed is fine – admirable even. Unprepared is not.

That’s when I start to sweat. See, unfazed is fine – admirable even. Unprepared is not.The fact is, when Amazon enters a market – any market – it has a transformative impact. Whether or not you are among the brands considered to be directly in Amazon’s

The fact is, when Amazon enters a market – any market – it has a transformative impact. Whether or not you are among the brands considered to be directly in Amazon’s cross-hairs – the likes of JB Hi-Fi, Harvey Norman, or Myer – the ‘Amazon Effect’ is going to change the way your consumers want to do business with you.No place for complacency

No place for complacency
Such is the scale of its market influence, Amazon drives a seismic shift in both consumer expectation and behaviour. In every market it has entered, the appetite for ecommerce has grown substantially, as has consumer expectation on the quality of every aspect of the online shopping experience.

According to Internet Retailer, Amazon comprised 65.9% of the $53.1 Billion growth in U.S. online retail in 2016.Put simply, if you don’t have an ecommerce offering currently – you’re going to need one. If you’ve currently got one, it’s going to need to get better. A whole lot better.

Without experiencing it firsthand, it can be easy to underestimate the extent to which Amazon has changed the game when it comes to ecommerce. However, those who have, for example, lived in a market where you’re able to subscribe to Amazon Prime understand just how far the bar has been raised.

While this undoubtedly represents an obvious threat, it also creates an avenue of opportunity for brands by contributing to the overall growth of the ecommerce category.

Many Australian retailers have world-class online experiences already – The Iconic for example – and for them, this is an opportunity to ride the Amazon wave to even greater success, as more and more people look to shop online.

For smaller retailers, Amazon’s expansion represents an opportunity to break into the ecommerce market by setting up shop on Amazon Marketplace.

For those who find themselves somewhere in the middle, Amazon’s arrival is a reckoning. Luckily, there’s still time to bolster your ecommerce offering in line with consumer expectation, ensuring you’re not left behind when the big day arrives.

First responders
Far from taking it lying down, a number of Australian brands have stepped up their defences in anticipation of Amazon’s arrival, with a particular focus on cutting down delivery times, increasing digital capabilities, and better leveraging data to personalise the customer experience.

Even more notably, however, is the fact that many are rejecting the idea of their bricks-and-mortar store networks becoming redundant, seeing them instead as a valuable asset in their Amazon arsenal.

Super Retail Group chief Peter Birtles describes their retail network of over 670 stores as a platform to offer customers a more engaging experience in an increasingly transactional, product-focused economy.

They are currently working to create a more seamless shopping experience between stores and their online offering, adding a range of delivery options including 90-minute ‘click and collect’ and same-day services, as well as using customer data more effectively to create personalised loyalty programs for customers.

Myer, Wesfarmers and JB Hi-Fi are also said to be implementing similar changes to ensure their survival in Amazon’s age of ‘extreme convenience’. Supermarket giant, Woolworths, has even established a separate unit to review ways to minimise the Amazon threat and improve its home delivery and online businesses.

Not all doom & gloom
Amazon’s arrival doesn’t need to spell doomsday for your business. It has the potential to present as many opportunities as it does threats for brands willing to be proactive in adapting to the new economy.

Amazon will also need to prove themselves locally and lure consumers away from more established competitors such as eBay, so are not arriving unencumbered.

To learn more about what the future holds for the Australia retail landscape, download Carat’s ‘Retail Redefined’ booklet here.

*This article originally appeared in the July edition of AdNews

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