Australian retail biggies beef up online presence to combat Amazon

Australian retail biggies beef up online presence to combat Amazon
Australian retail biggies beef up online presence to combat Amazon

The Amazon effect has clearly set in.

Long before the online retail giant stepped into Australia, there was nervousness among retailers here.

Now, with Amazon officially launching its marketplace, Myers and Woolworths are among those who are preparing for the increased competition. So are other leading retailers such as JB Hifi and Harvey Norman, among others.

Myer has come up with The Myer Market, which launched recently and is a marketplace that allows third parties to sell their wares, similar to eBay.

At Woolworth's annual general meeting, its Chairman Gordon Cairns said the supermarket chain was ramping up its online offering in response to Amazon’s entry.

Meanwhile, at Mirvac's annual meeting in November, its chief executive Susan Lloyd-Hurwitz said she was looking forward to Amazon’s arrival.

"Our view is that the fear is far worse than the reality's going to be," Lloyd-Hurwitz told The Australian Financial Review after the AGM.

Mirvac’s portfolio includes the country's most productive mall, the Broadway, in uptown Sydney.

Mirvac's specialty sales growth, a key indicator, is also rising. In the September quarter, specialty sales growth hit 6 per cent among Mirvac's malls, unlike many other malls 

As online shopping surges, it has also had another effect.

Real estate developers are investing record sums of money into new warehouse space, building bigger, taller structures to meet the needs of e-commerce - and the robots that help it along, Bloomberg reported.

Builders spent $US2.7 billion on US warehouse construction in October, the most since the census started keeping track in 1993.

The size of the average warehouse completed this year was 188,000 square feet, more than double the size in 2001, according to a CBRE report cited by Bloomberg.

"It's the notion of the endless aisle," said Joe Dunlap, a managing director at CBRE.

A retailer stocking 30,000 items in its stores might offer 10 times as many items for sale online. More stock means larger footprints. Higher ceilings accommodate mezzanine levels, letting operators cram more shelves into a building.

Amazon recently bought more than 2 hectares of land in Sydney’s southwest, next to a warehouse it has a lease for. It paid $7 million for the land, according to News.com.au.

Earlier this year, Amazon secured its first distribution centre in Melbourne's outer south eastern suburbs (picture above).

The online retail giant had earlier missed its widely anticipated launch on Black Friday.

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Online Retail Amazon

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