OK it’s party time! No, seriously the confirmed arrival of Amazon to our golden shores is cause for a celebration within the retail industry. And I don’t mean that only online retailers should be feeling pumped about the more obvious opportunity that the Amazon channel brings. Traditional bricks and mortar retailers will also experience the benefit.
Amazon’s imminent arrival is the necessary shake-up the Australian retail industry needs. It will drive change at a faster rate than we’ve seen in many years. I regularly witness the frustrations of retail industry professionals, unable to get strategies past the board or C-suite that are aimed at digital transformation, logistics optimisation and the blending of physical and digital. The topic of many a well attend panel session or webinar in this industry has been “how to get boardroom approval for…?”. But now, this is all about to shift.
Why? Because the Australian market now has a very compelling reason to ensure retailers are the best they can be by the time Amazon arrives. Boards respond quickly to the fear of losing market share — providing your proposition is of course well researched and positioned. There is enough overseas data to illustrate what happens when Amazon arrives and how to be on the right side of that. Retail executives wanting to lead transformation projects need to do their research and make compelling arguments. But remember if what you are proposing doesn’t make it easier, faster or cheaper to do business then ditch the idea.
Given time Amazon in Australia is likely to become the biggest individual retail store — as it is in the US and the UK now. However, it does drag plenty of retail brands along with it, as well as leave some behind in the dust. There is no question that the online sector will continue to experience significant growth, driven among other things by Amazon’s rise. Every retailer now has the chance to benefit from the growth in the online sales pie.
Logistics mean opportunity
It is worth noting that Australia is not top of the list of Amazon’s priorities. Yes, they are coming, and yes, they will have huge impact, but on their most recent Amazon investor call they listed 20 strategic markets in current focus and Australia didn’t even make that list. We have huge distances between relatively small cities and small total population by global standards. Amazon is aware of the logistical difficulties and knows it is a challenge to deliver quickly here. They will need time to scale to service our market effectively without long delivery times, and this gives other Australian retailers time to optimise operations.
Your value proposition
Take a good hard look at this. If your current value proposition just revolves around range and price you are in trouble. The argument that Aussie consumers just love a bargain, or are incredibly price conscious is often used to defend this, but the reality is different. All consumers make value decisions, and faced with no compelling reason to stick with a brand we will defer to price. In the absence of an alternative, low cost wins. However, very clearly and in the same way as in most other markets we will pay for convenience. This is the way to ensure success. Be more convenient than the next guy, with appropriate range and price and you will win. This is where retailers in Australia with physical stores can use them as a huge weapon against the potential loss of market share to Amazon (and others). If you can optimise your store operations, delivery networks and order orchestration processes you can offer consumers a range of omnichannel fulfilment options and convenience that Amazon will struggle to compete with — certainly for the foreseeable future.
Lift the bar
So, by optimising and becoming faster and easier (not just cheaper) you have the chance to win, but you need to get started now. The Australian retail industry has some outstanding retailers and individuals within. However, to seize the opportunity, we must seriously raise the bar to prevent a consumer belief that Amazon is far better. That requires collective action to lift the standard about what normal looks like.
The good news is that no-one is alone. Whether you are a sales assistant at the coal face, a business manager in head office, a CEO or board member and anywhere in between, there are experienced individuals out there to help and provide advice. Above all as an industry let’s embrace this challenge and use it to be better.
Graham Jackson is CEO, Fluent Retail
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