Amazon’s seismic hit is coming to Australian retailing

An Amazon Fresh truck in California. Kevork Djansezian/Getty Images

Amazon’s arrival in Australia from the US in 2017 will mean huge disruption for the retail industry, according to analysis by Deloitte.

The professional services firm has released its annual Global Powers of Retailing report, identifying the 250 largest retailers globally by revenue and examines current trends and economic prospects.

“If Amazon isn’t on the agenda at board meetings for Australian retailers, then it should be,” says David White, national leader of Deloitte’s Retail, Wholesale and Distribution Group.

“We are already seeing several retailers setting up task forces to assess the potential impact of an Amazon market entry, but it’s not yet clear what exactly the company has planned for Australia.

“But we do know that where Amazon has entered new markets, impacts on local retailers have been seismic and across almost all categories and channels.

“So retailers can’t afford to wait and see what Amazon does — they need to be developing strategies and taking action now.”

Amazon has officially neither confirmed nor denied that it plans to open in Australia.

However, analysts, who were been briefed by Amazon, say the online retailer wants to destroy the local retail industry.

“We spoke to the guy rolling out Amazon’s business here in Australia and in his words: ‘We are going to destroy the retail environment in Australia’,” said Watermark Funds Investment chief investment officer Justin Braitling.

The market share of the major Australian supermarkets — Coles and Woolworths — is already under attack by discount chains, including German player Aldi.

A move by Amazon will put further pressure on margins. According to Richard Goyder, CEO Wesfarmers, the owner of Coles supermarkets, Amazon has the capacity to “eat all our breakfasts, lunches and dinners”.

Amazon has been recruiting in Australia for staff to work at AmazonFresh, another indication of its plans for the local retail market.

The company’s website currently has more than 100 job vacancies listed for Australia.

“As a member of a team focused on innovation, you will responsible for building a system to support a new and confidential AmazonFresh initiative that will help revolutionise the grocery shopping experience,” said one job ad for a software development engineer.

Amazon, the world’s largest e-retailer, ranked 186th in 2000 when it first entered Deloitte’s top 250. It is now in the top ten.

Only two Australian retailers rank in the top 250 globally, Woolworths and Coles, as this chart shows.

Source: Deloitte

Wesfarmers has overtaken Woolworths in the rankings for the first time, driven by growth in its Bunnings brand, as Woolworths exits its home improvements business.