With Amazon Australia now live, analysts have continued number crunching to determine the e-commerce giant’s long term impact – e.g. Morgan Stanley analysts estimate that Target & Kmart’s parent company, Wesfarmers, could lose $400 million in annual earnings to Amazon by 2026.
Retail Analysts from Citi predict that consumer electronics retailers JB Hi-Fi and Harvey Norman will be among the hardest hit.
Retail analyst, Scott Kilmartin, believes that Amazon Australia’s website will make things “tricky” for some Australian retailers, especially those reliant on bricks-and-mortar stores:
“Amazon is Father Christmas for consumers, but it might be the Grinch for retailers that has already had flat sales”.
UBS analysts predict margins for many major ASX-listed retailers will fall 100 to 200 basis points by 2023, pulling down earnings nearly 20%. Super Retail Group, Myer and JB Hi-Fi are tipped to be the hardest hit.
UBS also forecasts that Amazon will only obtain 2% of retail sales within five years, lifting revenues to about $3.5 billion by 2023, and dampening local retailers’ sales by 2%.
Citigroup analysts forecast that Amazon Australia could produce about $200 million in additional sales before Christmas, thereby disrupting like-for-like sales growth and margins for established local retailers.
The news comes shortly after the ACCC’s announcement which informed it would not offer protection for “uncompetitive” firms, even if it means they could fail at the hands of Amazon Australia.
It’s not all doom and gloom, however, with many retailers – including eBay and Kogan.com – affirming that Amazon’s entrance will ultimately be good for Australia’s retail landscape, promoting innovation and growth.
Russell Zimmerman, Executive Director of the Australian Retailers Association, also agrees that Amazon will assist with the growth of Australian retailers:
“We never believed that Amazon will decimate retail. We’ve always believed that Amazon is here to assist the retailers of Australia to grow and develop their businesses both locally and internationally.”
