The 3 threats to Australian retailers in 2018

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Australia retailers can expect further competition from global players this year, according to the latest the Deloitte Global Powers of Retailing report.

There are now 38 Top 250 global retailers operating in Australia.

And over the past 12 months, new players outside of the Top 250 have entered Australia, says David White, national leader of Deloitte’s Retail, Wholesale & Distribution Group.

JD Sports, the UK sports-fashion retailer, now has five stores in Australia.

“Also, well-established international players in the luxury retail market, such as Swarovski and Tiffany & Co, have opened new stores, expanded existing footprints and introduced new brands to our market,” white says.

“We also saw the French-owned retailer Décathlon open its first bricks-and-mortar store in Australia in 2017 and Amazon’s long-anticpiated arrival to our shores.”

Deloitte paints the local retail market as in a calm spot before a coming storm.

“Whilst the global retail environment appears to be relatively stable, Australia is facing a number of potential disruptors which could have a significant impact on the retail landscape,” says White.

His three key disruptors to look out for:

    Amazon. White says the online retailer’s initial launch of its on-shore business didn’t have the big bang effect some commentators were expecting.

    However, White says: “As Amazon builds out its infrastructure and services in Australia in 2018, we can expect its presence and influence on the market to grow significantly, particularly in the second half of the year and in the lead up to Christmas. We’ll have to wait and see the ultimate impact of Amazon’s on-shore business in Australia, but it’s important to remember this also creates opportunities for Australian retailers.”

    Lidl. There is speculation the discount supermarket operator, owned by the 4th largest retailer in the world, The Schwarz Group, is preparing to enter the Australia market following recent land purchases, securing of trade markets and talent acquisition.

    White says: “Should Lidl choose to set up shop in Australia, it will take time for the full effect to be felt, in much the same way Aldi took a number of years to grow its market share here. The impact of Lidl in markets such as the UK has been transformational for the sector. It’s certainly another case of wait and see.”

    China. Chinese retailers and e-platform providers are either entering the Australian market or expanding their operations. In 2017 Alibaba opened its Australian headquarters in Melbourne, JD.com is expected to follow shortly, and Vipshop Holdings (VIP.com) opened its new distribution centre in Sydney.

    White says: “These fast-growing Chinese retailers and e-commerce platform providers are starting to make a significant impact on the global retail market. This provides Australian retailers with a huge opportunity to take advantage of high Chinese demand for Australian products.”

He says the retail market grew well in 2017 but at the same time the level of competition continued to increase.

“Ongoing population growth, a strong tourism market and improving wages are all set to ensure the overall retail market continues to grow in 2018,” he says.

“However, with the increase in competition from both international and domestic retailers, we can expect to see further consolidation in the sector.”

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