Retailers don’t have strategy in place to combat Amazon

amazon11Shoppers may be ready for Amazon, but 78 per cent of Australian retailers still don’t have a strategy in place to combat the global retail giant, Commonwealth Bank’s latest Retail Insights research showed.

Jerry Macey, Commonwealth Bank national manager for retail, said it seemed Australian shoppers are ready for Amazon but many of the country’s retailers are still at the drawing board.

“Although Amazon’s arrival is reportedly weeks, not months, away, it will have a staged entry,” Macey said. “So there is time to put plans in place, but that window is closing.”

Macey said there is still one quarter of retailers concerned about Amazon who not only don’t have a plan, they aren’t working on one.

Retail Insights also found an unexpected generational split among Australian shoppers.

The older a person is, the more likely they are to be aware of Amazon. But older shoppers show the least inclination to buy from Amazon. In contrast, younger shoppers are more likely to buy from Amazon, despite having the least awareness of it.

“Savvy retailers will be looking to better understand their target market and provide a relevant experience for that group,” Macey said. “For instance, younger generations want a more engaging experience in-store to prevent them drifting online.”

The report also revealed almost three quarters (73 per cent) of consumers are comfortable buying Amazon branded-products. A third are likely to subscribe to Amazon Prime for extra benefits, likely to include unlimited free delivery and access to video streaming, for a fee.

“Shoppers are clearly indicating their willingness to buy from Amazon and flagging a high degree of trust in the brand – before it has even arrived in the local market,” Macey said.

Almost nine out of ten retailers are aware of Amazon’s plans to enter the local market, a rise of 27 per cent over the past six months, the study shows. Of these, the majority (52 per cent) now perceive Amazon as a threat, up from 47 per cent at the beginning of 2017. The proportion of those considering Amazon’s entry as an opportunity remained flat over the past six months at 13 per cent.

Despite heightened awareness, the number of merchants who perceive Amazon as a threat and also have a plan to compete has only grown moderately, from 14 per cent to 25 per cent. A further 50 per cent of retailers are working on a strategy.

According to Macey, with so many retailers planning for Amazon’s arrival, the country will be seeing merchants ramp up activity.

“Those excited about expanding their channels will be learning the ropes of Amazon Marketplace, and those concerned will be considering their overall strategy including products, categories, pricing and distribution,” he said. “So even if you don’t think Amazon will impact your business directly, you need to be ready for an increase in competitor activity.”

Shoppers said their purchases from Amazon are likely to include the categories of books, gaming, music and media (47 per cent) followed by consumer electronics/computers (35 per cent) and household appliances (32 per cent).

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