Retail veteran and Golf Warehouse boss Eric Faesenkloet says he will open a warehouse in Australia as the threat of Amazon looms.
Faesenkloet, who has owned and operated Golf Warehouse stores across New Zealand for 40 years, plans to open a warehouse in Australia to directly ship goods to hiscustomers here tax-free.
Faesenkloet has had to continually realign his pricing to remain competitive with overseas websites that export product to New Zealand tax-free.
"Ninety per cent of the goods that we bring into the business are coming via Australian warehouses to our business and we're currently negotiating with them to ship direct to our customers," he said. "We'll set up an eBay site in Australia."
It was time the Government charged GST on imported goods under $400, Faesenkloet said.
"It's not by chance that all of these clothing retailers in New Zealand are falling over in business - it's [not] that they're doing anything wrong in retail, it's loop holes the Government has allowed ... in the tax system," he said.
"All of these companies are paying GST, they're paying PAYE tax, company tax, so Inland Revenue is not just missing out on GST, they're missing out on all of the other revenues that are associated with running a business in New Zealand, and unless they do something about it it's going to have a serious impact."
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.
Faesenkloet would not close physical Golf Warehouse stores because they offered convenience for customers.
"Our customers walking into the stores and buying products offer convenience, but a lot of people are getting more aligned to buying on the internet and they'll soon work it out that it's 15 per cent cheaper to buy products under $400 directly shipped from other countries," he said.
"The tax department at some point has to make a call on it because New Zealand retail, particularly businesses that sell products below $400, are going to be seriously affected."
"Other retailers are smart, they'll be doing what I'm doing and looking at having a place in Australia where they can export to New Zealand tax-free."
Chris Wilkinson, managing director of First Retail Group, said the threat of Amazon on local New Zealand retailers was imminent.
"Big businesses are moving with pace and making the right moves, but too many mid to smaller retailers are putting their heads in the sand and looking for reasons why Amazon won't succeed," Wilkinson said.
"The simple fact is that it will [succeed] - and have an impact across many different categories, with few immune."
The retail sector has changed more in the last 10 years than it had in the previous 100, he said.
The next 10 years would be defined by the likes of "mega-players" such as Amazon coming to the New Zealand market.
New Zealand retailers need to step up their online presence, an industry head says.
"A big push on lean methodology [creating more value for customers with fewer resources] in terms of supply chains, and reducing layers within the business. Its really far reaching and there isn't anything that isn't touched.
"We know there are some sectors saying, 'Oh it won't affect us, we sell furniture, we sell this', but it will affect everything because e-commerce is borderless."
Wilkinson also said it was time New Zealand's GST legislation was changed.
"New Zealand is one of the few outliers. Every other country has done this. The UK has done it, if a country that size can deliver, [why can't we?]," he said.
First Retail Group has been looking into the impact Amazon had on the UK retail market ahead of its arrival Down Under.
"A lot really rests on Amazon Prime," Wilkinson said. "Amazon Prime is what will start to transform consumer behaviour significantly."
Amazon Prime is a membership program that gives customers access to streaming video, music, e-books, free shipping and a variety of other services and deals.
"We've got this situation where it will be such a compelling proposition for consumers that Amazon becomes the first stop," he said. "That's what we've seen in the UK - it's become that first touch point which is a real concern for retailers."
We'll start to see the re-emergence of artisan businesses, and the re-emergence of experiential shopping environments where there is more of a focus on leisure rather than provisioning.
There would always be physical retail stores, but the traditional focus on customer service would shift to customer experience, Wilkinson said.
"We're seeing a lot of businesses in Australasia testing new formats ... where they can have curated ranges of products, and use what we call 'endless aisle' which means that you go in and you might find some brands such as perfumes or cosmetics, and the rest of the products are available online, and that you'll be able to get those overnight through delivery," he said.
"The landscape will change in terms of we'll start to see the re-emergence of artisan businesses, and the re-emergence of experiential shopping environments where there is more of a focus on leisure rather than provisioning.
"One of the challenges we have in New Zealand is that because offshore retailers have such strong e-commerce presence and capability they often dominate the space online, so what we're seeing now is that New Zealand retailers are needing to become more savvy with their online stores, and leverage the strategies that the big overseas retailers are using."
