'Amazon effect' has spooked local retailers, according to report

The confidence of local retailers has been dented by Amazon's expansion into Australia, according to research by Massey University. Photo/Chris Ratcliffe/Bloomberg

Local retailers are being spooked by the "Amazon effect" according to research by Massey University on the Big Issues in Retail.

A survey by the university found business confidence had fallen since 2016 and the global online retailer is being cited as the main reason for uncertainty.

Jonathan Elms, lead researcher and a professor at Massey, said the comments in the open section of the survey showed retailers were concerned about Amazon establishing a presence in New Zealand and possible changes to the tax system.

"Amazon is a very large, efficient retailer that is able to do things cost-effectively. But it is going to appear even cheaper because they're not paying GST on their imports under $400 into New Zealand.

"Domestic firms see that as a double disadvantage to their business."

Amazon has announced plans to open its first Australian warehouse in Melbourne with analysts expecting its Australian business to be geared up in time for Christmas - making it a much closer delivery point for New Zealand consumers.

Analysts here also expect Amazon to build a warehouse in the New Zealand market sometime in the future and Hamilton has already said it wants to woo the retail giant to build there.

The Massey research found just under 40 per cent of retailers expected their sales to increase in the short-term, down from 50 per cent last year.

Those who expected sales to drop grew from 12 per cent in 2016 to 18 per cent this year.

The survey also found 57 per cent said the GST issue was leading to negligible losses while 21 per cent estimated they were losing 33 per cent or more of sales.

Elms said Amazon would have the largest impact on retailers that compete on price.

"If you look at what has happened in overseas markets, shopping malls are struggling and department stores that compete on price have been obliterated."

But Elms said the Amazon effect wasn't all bad news with consumers set to benefit from retailers who were investing in a better in-store experience and a more integrated store and online sales platforms.

"Meanwhile, smaller retailers can also use Amazon as an additional platform to sell their goods."

The survey also showed continued concerns about skill shortages in the sector with the two most frequently-mentioned priorities for human resources being staffing and training.