Amazon arrives in Australia: Channel rocked by retail revolution

Amazon arrives in Australia: Channel rocked by retail revolution

What happens when a technology behemoth lands on Australian shores? The channel has an endless list of questions, but remains short on answers

There’s a race underway in the technology industry, with Amazon, Apple, Facebook and Google all vying to become the world’s first $1 trillion company.

Collectively, they are the most influential companies on the planet, with such a conversation becoming a favourite past-time among investors and business executives.

According to Scott Galloway — a New York Times bestselling author — the four icons of the industry have captured the imagination of the world because they each uniquely provide a connection to God (Google), love (Facebook), consumption (Amazon) and sex (Apple).

As outlined in his book — The Four: The Hidden DNA of Amazon, Apple, Facebook, and Google — each organisation is comparable to a part of the human body.

Therefore, Google is the brain, or the replacement for God. Facebook is the heart, or the source of love. Amazon is consumption, or the gut. Apple is sex.

“Going into the gut is Amazon,” said Galloway, when speaking to Forbes. “The company that is worth the most in the world is usually the company that masters the art of ‘more for less’.

“Currently, Amazon gives consumers the best deal in the world. They get back all 100 cents on the dollar in terms of products and services.”

As a result, Galloway predicts Amazon will become the first company reach the trillion-mark. But closer to home, in Australia, why should such global dominance matter?

Because for those living under Uluru, Amazon has arrived Down Under, going for the gut with a brand of service centred around the very notion of ‘more for less’, an approach that threatens to redefine the local retail market.

In 2018, the pace of change in the retail sector is expected to reach new heights, as newer and flashier concepts and brands take hold in the Australian market.

Amazon’s Australian launch, timed just before the busy Christmas period, signals a major shake-up for the retail sector, shining a spotlight on traditional retail models, with questions arising as to whether such methods will be able to retain customer mindshare.

The Australian Retailers Association (ARA) teamed with Roy Morgan Research to reveal its annual pre-Christmas sales predictions, which show that consumers will spend more than $50 billion in retail stores during the Christmas period, ranging from 15 November to 24 December 2017.

As a result, consumers will spend 2.8 per cent more on Christmas in 2017, compared to 2016.

According to ARA executive director Russell Zimmerman however, the estimate falls considerably below the four to five per cent growth that retailers would like to see during this period.

“As online retailing continues to grow, we predict online gift purchases to increase by 3.96 per cent,” Zimmerman said.

Delving deeper, smart retailers recognise that success in the market is achieved through placing a strong emphasis on their customers, service and experience.

A recent SAP 2017 Australian Digital Experience Report revealed a clear demand from Australian consumers for high- quality, seamless and personalised experiences across online and physical stores.

Whether a global giant such as Amazon, or a family-run shop on a suburban street, customers will flock to the retailers who deliver this expectation.

Specifically, the report hammered in on the fact that retailers need to provide a consistent experience across all customer channels — in-store, mobile or online.

“Technology continuously shapes the environment in which brands of all industries interact with their customer,” the report stated.

“To excel digitally, brands must align their people and processes — not just their marketing or digital teams, but across all lines of business onto a single platform architected with the customer in mind.

“To engage your customer digitally, you must engage your workforce and your suppliers on their terms, and you have to marshal all of your assets to enable a consistent digital experience.”

Buying into customer experience

Retailers that have already heavily invested in technologies such as augmented reality and data analytics, are poised to seize the upper edge on completion, while stepping up customer service capabilities in the process.

These retailers are considering what customer spending habits are, who their customer is, where they’ve come from and crucially, how to keep them coming back.

Casting back to 2012, the retail sector looks a lot different from five years ago from a technology perspective, with the market expected to morph in different ways in the year ahead.

But it’s important for retailers to recognise what have they learnt from their market and customer behaviour in 2017 and how they can continue to stay relevant?

“We have a large culture of embracing change, which is a natural part of the business, and are constantly innovating to ensure that we remain current and relevant to our customers,” JB Hi-Fi chairman Greg Richards recently stated.

Since its acquisition of The Good Guys in November 2016, JB Hi-Fi has laid claim to offering the largest ranges of home entertainment, consumer electronics and home appliances.

The 2017 financial year was a record year for the retailer, which saw sales rise 42.3 per cent to $5.6 billion on the prior year.

Specifically, Australian sales grew 10.9 per cent to $4.15 billion and online sales grew 38.4 per cent to $158.9 million, representing 3.8 per cent of total sales.

Richards placed the retailer’s highly trained staff members, as its most important asset, but also highlighted that an integral part of its strategy was to encourage innovation and diversification with new products, technology, merchandising formats, advertising and property locations in a controlled and responsible manner.

Meanwhile, JB Hi-Fi CEO Richard Murray, further cemented the company’s unwavering focus on the customer, on display throughout 303 stores across Australia and New Zealand.

Interestingly, the retailer noted its investment in service and technology to support its strategy through whatever channel a customer wishes to engage with the retailer, whether that is online or in-store.

“We have consistently referenced our low cost of doing business as a competitive advantage and a key enabler of maintaining our price leadership,” Murray recently said in his address to shareholders.

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