Amazon Effect: Big Trouble Brewing For Myer, David Jones, Target & Kmart

Amazon Effect: Big Trouble Brewing For Myer, David Jones, Target & Kmart
SHARE
THIS



A new report into the effect of Amazon’s arrival in the $300 billion Australian retail landscape paints a bleak picture for many of the department store chains, with Wesfarmer’s Kmart and Target labelled “particularly susceptible”.

The report by investor management group Morgan Stanley and titled The Amazon effect in Australia reveals as much as $800 million could be stripped from the profits of mainstream stores such as JB Hi-Fi, Harvey Norman And Myer.

Kmart was right in Amazon’s firing line because it sells highly commoditised products with low margins. The average sale at Kmart is reportedly less than $10.

Another of Amazon’s specialities is clothing, which is bad news for the likes of Myer and David Jones.

The report noted that Amazon, whose model is online and super-fast delivery, will generate $12 billion of sales by 2026 with five distribution centres established across Sydney, Melbourne and Brisbane.

It found investors should retail avoid stocks and as added to ASX-100 listed retailers’ woes who are suffering their worst year since 2008.

Commenting on the study, Morgan Stanley’s retail analyst Tom Kierath said: “Since the announcement of Amazon’s entry in Australia, we think the market has mis-priced the impact across Australian consumer sector.

“Amazon’s entry in Australia will have a profound impact on the Australian retailing industry, in our view, as it has had on most markets.

“We have downgraded our industry view to cautious because we believe the Amazon impact will be broad-based.

“What strikes us is that the stock of the largest non-food retailer in the Australian market – Wesfarmers, which generates $22 billion in sales and $2 billion in profits from non-food retailing – has barely moved.

“We think that this market reaction implies that Wesfarmers will be relatively unaffected by Amazon’s entry – we would argue to the contrary.

“But given the success Amazon has had in other markets, we think it’s fair to assume that when it arrives in Australia, the offer will be very competitive,” he said.

 

Please login with linkedin to comment

Advertising Standards Bureau Digitial simon collins Wesfarmers

Latest News

Bangkok Thailand - August 31 2017 Facebook App on iPhone with computer laptop background closeup male hand hold social network on smart device concept.
  • Media
  • Opinion

Young Australians Will Abandon Facebook If It Doesn’t Do More To Combat Hate Speech

In this guest post, founders of The Daily Aus Sam Koslowski and Zara Seidler discuss why in order to stay in the game and keep its user, social media giant Facebook needs to do more to combat hate speech… For young Australians, Facebook is on the decline. Unless the platform better responds to its user’s […]

Opinion

by B&T Magazine

B&T Magazine
Baskin-Robbins Australia Awarded For Stranger Things Campaign
  • Media

Baskin-Robbins Australia Awarded For Stranger Things Campaign

A brave move has paid dividends for Baskin-Robbins Australia who recently announced they won the award for Best Digital Initiative at last week’s QSR Media Awards. Baskin-Robbins Australia’s Master Licensee, Palm Oasis Ventures took a risk in launching a digital winter campaign targeting a new millennial and Gen Z demographic when it partnered with Netflix to launch season 3 of the streaming giant’s most popular show, the sci-fi horror series, Stranger Things.

TikTok Turns On Trump (Again)
  • Media

TikTok Turns On Trump (Again)

TikTok has turned on Trump once again. As yet, no one brave enough to speculate it's the work of the Chinese government.

SAN FRANCISCO, CA JULY 1, 2018: Entrance to Adobe San Francisco office location in historic Baker and Hamilton warehouse
  • Media

Convert Digital Awarded Adobe’s Magento Gold Status

Leading eCommerce website development agency, Convert Digital, has achieved the coveted Magento Gold Status from Adobe. This accomplishment has been reached following the agency’s continuing work with the Magento 2 platform - platform that is incredibly robust and offers unrivalled flexibility and scalability.

Influencers Raise $95k For Starlight Children’s Foundation In Do-Good Campaign Via Born Bred Talent
  • Campaigns

Influencers Raise $95k For Starlight Children’s Foundation In Do-Good Campaign Via Born Bred Talent

Influencer marketing agency Born Bred Talent has partnered with the Starlight Children’s Foundation to mobilise their talent roster and support the Stream Raiser campaign, contributing over $95k in donations thanks to virtual fundraising efforts.  With a combined reach of 6.2 million across Instagram, TikTok and Twitch, 9 Australian influencers contributed 76% of the $124k raised […]

UNICEF Set To Launch ClickforCovid Relief Gaming Stream
  • Advertising

UNICEF Set To Launch ClickforCovid Relief Gaming Stream

In 2020, the ‘new wave’ of youth consumers have inspired the world with their activism and fundraising, so eGEN is proud to have partnered with UNICEF, Loserfruit and friends to help gamers fight COVID and help the world’s most vulnerable children. The world’s most famous strawberry will be joined by her Click crew for a […]

Silverbullet Achieves Adobe Audience Manager Specialisation
  • Media

Silverbullet Achieves Adobe Audience Manager Specialisation

Silverbullet Data Services Group (Silverbullet), has become one of only four businesses globally to achieve Adobe Specialisation in EMEA for Adobe Audience Manager. Adobe Specialised Partners are acknowledged as the most skilled technical practitioners throughout the global partner ecosystem. Specialisations are earned after organisations achieve a level of certified expertise in an Adobe solution and […]

Businesswoman hand connecting jigsaw puzzle, Business solutions, success and strategy concept
  • Technology

General Mills Partners With Zyper To Build Virtual Superfan Communities

Food company General Mills has partnered with Zyper, a marketing platform that connects brands with their superfans, to build virtual fan communities for General Mills’ brands. As part of the agreement, General Mills will use Zyper’s software to initially identify the Betty Crocker and Fibre One brands’ top one per cent of fans on social […]

Facebook Pledges $500,000 To Group Admins Across Australia
  • Technology

Facebook Pledges $500,000 To Group Admins Across Australia

Facebook is continuing its Facebook Australia Groups Impact Fund, today announcing $500,000 in funding for the program. The grant was originally designated for bushfire recovery groups, however, has now been extended to local communities across the country who might be facing hardship. Facebook said it is on the lookout for groups that have a positive […]