Retail sector saw a big day with the US retail mammoth, Amazon, coming into limelight with the launch of its retail offer and third-party marketplace, while stronger-than-expected retail sales data helped many local retailers rejoice following some weakness in the last few months. Particularly, October retail sales have risen 0.5 per cent on a seasonally-adjusted basis after a lacklustre September quarter, and this has been better than the consensus expectation for a 0.3 per cent increase. The Australian dollar surged to US76.16 cents against US76.07 cents before the release of the data.
In early trade and with Amazon launch news, Myer (MYR) slipped by 0.7 per cent, Super Retail Group (SUL) was down 0.9 per cent and Harvey Norman (HVN) had slipped by 0.9 per cent. However, post the sales update, MYR surged 1.3 per cent, SUL surged up 3.13 per cent and HVN rose 6.25 per cent. Retailer JB Hi-Fi was also up 6.7 per cent.
On the other hand, Amazon has commenced taking orders along with shipping of products from Melbourne’s east warehouse. About 23 product categories relating to consumer electronics, outdoor goods, toys, and so forth are seen to be put forth through the launch for multiple products’ offerings. The key differentiator for Amazon has been its delivery speed which also comes with a cost; and in Australia, next-day delivery has been indicated to cost $9.99 in Sydney, Melbourne, Brisbane, Adelaide and Canberra while a slightly high number has been slated for Perth and regional cities in Victoria, NSW and SA for delivery within two days.
On one side, Aussie retailers have been bearing the pressure and are expected to lower prices, and reinvent offerings while putting down on earnings in order to compete; on the other side, we already see handbag retailer Oroton (ORL) falling prey to administration and Godfreys under immense pressure with the challenges that have been building up in the sector in 2017. The key to sustainability and success for the locals would thus be improving on customer experience.
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