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Wesfarmers chief warns of Amazon threat

 

coles,supermarketWesfarmers CEO Richard Goyder says Australia’s supermarket trade is not a duopoly controlled by Coles and Woolworths and online retailer Amazon is a far greater threat to local retailing.

Goyder, whose Wesfarmers conglomerate owns Coles, has also made pointed references to the foreign ownership of competitors Aldi and Costco and questioned what tax contribution Amazon made in Australia.

“The narrative in Australia is that there is a duopoly in supermarkets – I read that all the time,” Goyder told an American Chamber of Commerce lunch in Sydney.

“Well I don’t buy that at all.”

Goyder said Woolworths and Coles had a “strong position” in Australian supermarket retail but were not alone.

“Aldi now has 300 supermarkets across Australia – in fact it’s not across Australia, it’s across the eastern seaboard,” he said.

“They’ve got German parents, they’re all home-branded product and I’m not sure what significant community contributions they make – I’m sure they do something.”

Goyder said bulk retailer Costco, which has three warehouse stores across Australia and is expanding, was “owned by a massive US company with a market capitalisation significantly higher than Wesfarmers”, while Metcash had 3000 outlets.

However Goyder said there was a “gorilla” on the doorstep in the form of Amazon.

Amazon, with a market cap of around US$156 billion, sells many items sold by Wesfarmers businesses such as Kmart, Target, Bunnings and Officeworks.

“They are a good competitor,” Goyder said.

“I’m not sure how many people they’re employing in Australia, I’m not sure how much community contribution they make to Australia and I’m certainly not sure how much taxation they’re paying in Australia.

“If Wesfarmers is not strong, lean, dynamic, creative and innovative then Amazon will eat our lunch.

“Our aim is to make their time in Australia as hard as it possibly can by being as good a business as we can and earning the right for our customers to keep buying from us in Australia.”

AAP

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2 Responses to Wesfarmers chief warns of Amazon threat

  1. Peter October 30, 2013 at 10:23 am #

    Thats all very fine that there is competition but combined Coles and Woolworths still have around 80% of the food market and use their power to squeeze local suppliers. Their supermarkets are all in prime positions, Aldi is possibly a threat however most of their products are their brands and their stores do not carry the range that the 2 majors carry and certainly Metcash overall cannot really compete on the majors pricing. Amazon is a powerhouse and no doubt Target and Kmart would be affected but how much are they affected is another thing and certianly Amazon has not impacted nor is likely to impact the way Coles and Woolworths have done to other Australian stores and suppliers. Although their is some competition in the food sector I dont see their market share dwindling in any major way soon.

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