The influx of international retailers will continue in 2017 and beyond, according to the Global Powers of Retailing 2017 report from Deloitte. Australia’s strong economic conditions relative to other countries, high consumer demand for international brands and proximity to Asia is driving the arrival of the newcomers, Deloitte Retail leader, David White said.
Other key findings from the report were the contrasting performances in the home improvements sector that helped Wesfarmers climb above Woolworths in top 25 global retailers’ placings as Australia awaits the arrival of Amazon.
The total number of the Top 250 operating in Australia remains at 39, the same as last year. Another four have entered the Australian market, while four still operating in Australia are no longer in the Top 250. The new entrants are: American retailer, The TJX Companies Inc. that entered via the acquisition of Trade Secret, which operates 35 stores in Australia; UK department stores, John Lewis and Debenhams, which joined forces with established operators Myer and Harris Scarfe; and French leisure good retailer Décathlon, which has yet to have a significant impact on the Australian market.
“One of the key differentiators international retailers have brought to Australia is in their store design and customer experience model, leveraging their experience from larger markets,” White said.
“With just 16% of the Top 250 retailers globally operating in Australia, and US-based retailers making up nearly 50% of that total, we can expect more new global retailers to bring their operations to our shores in 2017. New entrants, coupled with the threat of Amazon, should make for another fascinating year for Australian retail.
“However, we are also seeing Australian retailers slowly fighting back, with investments in store design, concept and flagship stores on the rise. These new entrants will find Australian retailers better prepared and skilled to take on this new challenge compared to five years ago.”
Commenting on Australian retailers expanding overseas, White said: “In 2016 we started to see more Australian retailers expand their own operations into the US, Europe and Asia-Pacific, but the numbers are still relatively small. With competition in the domestic market threatening saturation in certain categories, we can expect to see more Australian retailers take a leap of faith into overseas markets in 2017.”
Wesfarmers and Woolworths continue to be the only two Australian retailers represented in the Top 250 at 21st and 24th, respectively (compared to 23rd and 21st last year). Wesfarmers has overtaken Woolworths in the rankings for the first time, largely driven by the continued growth in its Bunnings brand, as Woolworths exited its home improvements business.
The elephant in the room
Amazon continued its rapid ascent, joining the Top 10 leader board of the Top 250 for the first time in FY2015. The world’s largest e-retailer ranked 186th in 2000 when it first entered the Top 250, however, fueled by a constant stream of product and service innovations, it posted robust, double-digit growth since its inception in 1994.
“If Amazon isn’t on the agenda at board meetings for Australian retailers, then it should be,” White said.
With the rumoured arrival of the US giant to Australia’s shores some time in 2017, the potential for major market disruptions is huge, he says.
“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.”
This story first appeared in Appliance Retailer.
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