Amazon a wakeup call for retail to get shape up

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AMAZON is not expected to significantly disrupt the Australian retail market and cannibalize the sector like it has done in the United States, however landlords and retailers should not be complacent.

Speaking at the Australian Property Institute’s National Property Conference on the Gold Coast, m3property research manager, Casey Robinson, said the general consensus is that Australia would follow a similar path as Canada.

Canada may offer a better guide as to the impact of Amazon’s pending arrival in Australia, rather than the battered retail sector of the United States.

Also unlike Australia and Canada, Robinson said the rate of new stores in US had exceeded population growth, which was unsustainable.

However, the behemoth’s debut down under comes at a time when retail facing a number of headwinds, and familiarity with online shopping in Australia will pose challenges to some particular operators.

“We’ve got a low population density so it will make fulfilment a bit more difficult to start off with, and it will take longer for Amazon to get off the ground here.

“We do like to shop online, however; we’ve got a high penetration of internet use and a relatively high spend per capita online, so I suspect that once Amazon does overcome some initial obstacles, it will take off,” she added.

“But the impact on shopping centres and retail stores will be nothing like what’s been seen in the US,”

Robinson said this will have some impact on particular retailers, such as electronics retailers, sporting goods, clothing and toys.

“Customers are already accustomed to shopping online for these goods, and so they’ll feel comfortable in buying these goods off the Amazon website, likely.”

The entry of Amazon is a wakeup call for Australia’s retail sector which has struggled in the past to evolve, such as the rise in online retailing and arrival of international brands.

Robinson said Australia is relatively oversupplied of discount department stores and department stores.

As a result, landlords of shopping centres will need to remix their tenancy profiles to heighten the experiential aspect of their offerings, as department stores and discount department stores have been identified as more at risk than other retailers once Amazon officially open.

Australian Property Journal