New Zealand retailers need to act now rather than take a wait-and-see approach, as online giant Amazon gears up to launch next year in Australia, says an expert.
First Retail managing director Chris Wilkinson was the keynote speaker at yesterday's Fashion and Apparel Retailer conference in Auckland, organised by inventory software firm Cin7.
Wilkinson spoke on the arrival of Amazon in Australasia and its impact on the retail environment.
Amazon, which was founded by Jeff Bezos in Seattle in 1994, has secured its first warehouse in Melbourne and is starting to recruit in Australia.
The likelihood that Amazon would set up a New Zealand website after Australia was high considering the ease of shipping from Australia to New Zealand, Wilkinson said.
It was also possible the company could set up a warehouse locally, but either way, retailers should be preparing now for the arrival of Amazon rather than continue with a 'wait and see' approach, he said.
"Retail has changed more in the past decade than in the entire last century, [it's] at its most dynamic state ever. Market and consumer behaviour is changing rapidly and retailers [need] to be more agile and responsive."
Amazon made US$6.4b ($8.85b) last year from Amazon Prime - its subscription model service.
Data from the online giant showed that 44 per cent of households in the US, or about 65 million people, were Amazon Prime customers spending an average of US$2500 each annually. Non-prime customers spent US$540 on average annually.
Amazon created a risk for businesses that did not adapt, however, there was a window of opportunity to make the necessary changes ahead of its launch, Wilkinson said.
The work of retailers such as the Warehouse Group that were front-footing the arrival of Amazon should be a clear message to others in the sector, he said.
Amazon's arrival would also likely provide opportunities for companies that could operate outside of areas where the online giant was performing well.
"Businesses that have unique and differentiated product, can develop aspiration around their brand and [also] deliver an outstanding online experience have an edge that can't be replicated," Wilkinson said.
"There are a number of retailers in this area - the likes of Taylor Boutique, Augustine etc - that represent this well," he said.
"Those selling products without the benefits of exclusivity essentially become part of the 'commodity' market and become more vulnerable as more retailers will be active in their space."
According to a Deloitte report, The Digital Divide, digital influence now drove decision making in more than 70 per cent of all transactions.
Many Kiwi retailers were struggling because their online presence was lacking and they were not in the consideration of consumers, Wilkinson said.
This was primarily why retailers were suffering with overseas businesses gaining search priority. It was increasingly important as online sales continued to grow, he said.
The cost of freight was likely to drop across Australasia as a result of Amazon's arrival in Australia, Wilkinson said.
The company would likely replicate a model it has used in other countries, where if freight was not cheap enough, the company would set up its own distribution.