March 3, 2017 Chris Riddell

Amazon Attacks | Future of Australian Retail

Amazon Australia

This is the tone for the year ahead

Let me start by saying this, Amazon aren’t the doom and gloom story for retail in Australia. Unless you are Gerry Harvey that is.

There is no doubt whatsoever the landscape of retail has gone through some big step changes over the last few years. It’s evolving rapidly and globally, just as every industry on planet earth is. This is our new normal. Businesses from yesterday, are transforming themselves, they have to, or it’s time to pull down the shutters. We are in an era of innovate or die. Complacency and laziness with your customer are no longer tolerated in a high velocity, super connected world.

So why the noise about Amazon?

It is no secret that the sun kissed shores of Australia have for decades been a strong testing ground for major global brands such as McDonalds and major FMCG icons such as Mars Incorporated, Nestle and Unilever. There is a well known message that echos around the walls of the highly secretive strategy planning divisions of any megabrand , which is “If it works in Australia, it’ll work anywhere”.

McDonalds have a number of innovation stories that were started in Australia first. The first McCafe branch opened in 1993 in Swanston Street in Melbourne CBD, a nod and acknowledgement of the strong and vibrant café culture that Australia is known for today, by every living human on planet earth.

 

Australia’s first McCafe in Melbourne CBD

The McCafe concept was so popular, it then rolled out to 16 other countries before finally making its debut in the United States in 2001 in the windy city of Chicago.

To further support our position as an innovation hub for the fast food giant, Sydney has a McDonalds “Learning Lab” where where we saw the new menus and and service styles that are now in many of the stores around the country. The DIY Create Your Taste digital self serve stations which are now rolling out in the United States, and the majority of its 1400 stores in Canada, will be completed by the end of 2017, again this all started here in the land of opportunity, Australia.

McDonalds is transforming its in store experience, with greeters and chefs to enable it compete in an ever fast paced and competitive territory and to continue to build that lovin’ feeling with its customers old and new.

Australia isn’t all easy pickings. 

There are many stories of global icons landing here in Australia, unpacking their bags, surfboards, and getting out the party poppers only to quickly realise things aren’t actually quite that easy. Starbucks is a famous example of a megabrand that badly misjudged the temperature of the Aussie consumer. It was no surprise at all that Starbucks would want a slice of the booming coffee culture when it opened its doors for the first time in Sydney in Hyde Park in 2000.

Starbucks made a number of big mistakes, one of the biggest being it assumed Aussies would want the same product that worked so well in the USA. Weak, bitter, sugary syrup based coffee with gallons of milk is a hit in the big apple, but Australians tastebuds are more tuned to a stronger and far more sophisticated coffee taste.

The second big mistake that Starbucks made without realizing until it was too late, was that here in Australia, the local, ‘face to a name’ independent brands rule. There was a deep and ultimately fatal arrogance within Starbucks in that they wanted to tell us how we should drink coffee. Incase anyone needs to be reminded, Aussies don’t like to be told how to do things. By anyone.

Any global brand that still thinks they can come into a country and drop a same size fits all needs to be extremely wary. It’s not that it won’t work, far from it. It does however need to be intelligent, sophisticated and in this era of experiential living it needs to be highly personable. We are after all individuals, not machines.

Individual, crafted and hyper personalised experiences are the hallmark of a business of tomorrow

We are individuals. We like the unique. 

It was only a matter of time before Amazon decided to go after the elusive $20 billion retail market that is Australia. In the USA, Amazon holds an astounding 50% of online retail market share, there is no ignoring the fact they are a goliath, and they will bring their machine in a big way to Australia. If we are to believe the stories that are being drip fed through mainstream news, then Amazon will be putting physical stores on the ground across the country, and will also be launching with a fresh food offering to compete heavily with the duopoly that is Coles and Woolworths.

Coles and Woolworths need to have a shakeup, there is no doubt, and it’s been a long time coming. They are a constraint on the supermarket landscape, and as consumers we have suffered for years with a lack of any form of true innovation. The instore retail experience offered by both Coles and Woolworths is outdated at best, and stuck in a 1990’s time warp. Little more than token efforts have been made to up the anti when it comes to either the online or offline experience at the major retailers.

Will Amazon succeed in Australia?

The short answer is yes of course they will. The investment they are putting behind their launch is going to undoubtedly be unmatched to any other launch seen here before. They will shake up the retail space. Some of it anyway.

Amazon has $1 of every $2 of ecommerce sales in the US, and their business is growing rapidy. E-commerce is set to reach 20 per cent of sales in the US in 10 years and by that time Amazon will account for 10 per cent of all US retail sales.

Back here in Australia, for retailers that have been lacking in really innovating, and taken their customers for a long ride, they are right to be scared, and so they should be. The stats tell a story for themselves. Electrical retailers such as JB-Hifi, Harvey Norman, Coles and Woolworths, they are prime targets for being turned upside down very quickly. How can they respond now? Well only time will tell, but the clock has been ticking and it’s now very late in the day.

Gerry Harvey is worried about Amazon landing in Australia

Amazon is in the final stages of constructing a highly intelligent technology platform specifically for the Australian market which is designed to integrate with its international operations, according to research undertaken by fund manager Watermark.

The Amazon platform will be under the online brands used elsewhere called Prime, Prime Now and Prime Fresh. Watermark’s understanding is that prior to turning on its system, Amazon will go through and collect price-points on everything before setting prices at a 30 per cent discount. If this turns out to be true, it’ll be a big bang launch in September this year when they plan on going live.

 

 

For Australian retailers up and down this country, that have been working tirelessly to create incredible experiences for their customers online and in offline bricks and mortar stores, it will be business as usual. These brands, big and small, are used to delivering over and above, and creating exceptional offerings every single day. These are the leaders, the innovators and they are the trend setters.

We are in an era of innovate or die. The customer has to be at the centre of the experience

In truth, that’s how its always been, it’s really nothing new at all. If you continuously innovate, rigorously challenge yourself, put your customer at the centre of everything you do, and every single decision you make – the future will always be yours for the taking. We live in a remarkable country, and times have never been as exciting as they are today.

So what is next, beyond Amazon?

Today, right now we are also in the midst of an extraordinary revolution where Artificial Intelligence and Augmented Reality is about to bring us immersive experiences to almost every part of our lives. In the retail space eBay and Myer joined forces to create the first Virtual Reality store in Australia. When it launched in 2016, demand was off the charts and caught the team by surprise. Feedback was overwhelmingly positive and the teams are working on the next part of this blended future experience as we speak.

Amazon coming to Australia. That’s already yesterdays news, and it’s already happened. Look over the horizon, the future is augmented and intelligent beyond your wildest of dreams.

Now, where’s that double shot soy flat white of mine.

 

JOIN OVER 15,000 TREND HUNTERS

Get instant access to the latest trends and innovation stories from Chris Riddell's Global Innovation Network

You have Successfully Subscribed!

Send this to friend