Australia vs. China Retail Industry

This article explores the differences in Australia and China's retail industry, including departmental stores, hypermarkets, luxury products, e-commerce, and competition. It discusses the strategies adopted by both countries to address the challenges facing the retail industry and the trends shaping the industry.

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AUSTRALIA VS. CHINA RETAIL INDUSTRY
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China, Australia Retail Industry
There are several characteristics that help to point out differences in both
Australian and China’s retail sector. For instance, China’s retail sector continues to
experience significant growth as a result of growing middle-class. China on the other
hand is considered as the second largest retail market in the world based in the total
retail sales. The retail sales of consumers grew by a significant margin implying that the
consumption environment remained relatively stable. The driving force in China’s retail
industry is pegged on the influential abilities of the millennial in the retail sector.
Diversely, Australian retail Industry is experiencing dramatic changes that are attributed
to the influx of global retailers as well as increase in technological capabilities. The
steady growth in the retail sector in Australia is said to have been caused by high
unemployment rate.
Departmental stores
Based on the statistics from departmental stores in both countries, Australia’s
departmental stores have witnessed huge losses and shrinking revenue which is
attributed to competition that is brought about by online and offshore retail sector. More
so, consumers’ sentiments with regards to departmental store has been dwindling. This
market scenario is attested by the examples of major departmental stores in Australia
that are characterized by poor profits and losses. While departmental stores in Australia
continue to shrink, their counterparts in China are busy integrating online-to-offline
strategies aimed at maximizing all channels to increase competitive advantage (Balaji
and Roy 2017).
Examples of these strategies include digitization of retail outlets and enabling
easy access of entertainment gadgets. China’s departmental stores are also partnering
with internet players to carry out various O2O programs. China’s solution to dwindling
revenues in the departmental stores also factors differentiation strategy whose strategy
is to focus on product quality and service offering. More so, china is involved with
various initiatives that aim at transforming the business model. The solutions Australia
departmental stores have put in place to address the shortfalls include price battles with
the aim of trying to accommodate the consumers to the pay less (Ahsan and Rahman
2016). Companies such as Myer and David Jones are known to increase the ratio of

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house label and exclusive brands to decrease competition. The Australian departmental
stores are also involved in streamlining the supply chain by preferring direct sourcing.
Some of the existing players in the industry put their focus on expanding stores to
increase market share and influence brand perception among consumers (Bailey et al
2015).
Hypermarkets and supermarkets
The hypermarket and supermarket in China retail industry are experiencing slow
growth. The reasons attributed to the slow growth in hypermarkets and supermarkets is
poor economic growth, weak consumer reviews and high operating costs. Majority of
the main players in China’s supermarkets and hypermarkets are centered to local
operations while the mid-sized players tend to look for other markets regionally.
Besides, both supermarkets and hypermarkets stores opening have reduced in the
recent years. Most hypermarkets and supermarkets in China are downsizing to match
the trending needs of consumers seeking convenient stores, personalization and fast
delivery services (Bayly, Scollo and Wakefield 2014).
Online-to offline strategies are also encouraged among hypermarkets and
supermarkets. However, the online grocery and fresh produce business is gaining
traction while players seek private label development among other retail technologies
aimed at enhancing efficiency. When it comes to Australia, the supermarkets and
hypermarkets are becoming increasingly competitive. This has since led to private label
becoming popular. While China’s supermarkets and hypermarkets are influenced by
online-to-offline strategies, those in Australia are influenced by aggressive price
minimization strategies. Another crucial factor that differentiates Australian
supermarkets from those in China is that they are highly concentrated. The high
concentration is attributed to strong growth in the industry. Increase in competition in the
Australian supermarkets and hypermarkets leads to price cuts.
Convenience stores
When it comes to convenience stores, Australia’s convenience stores are
considered strongest in the world (Hajkowicz, Cook and Littleboy 2012). The
convenience industry in Australia has outperformed the grocery stores and as at 2016,
the value of convenience stores in Australia was valued at 8.3 billion. The value of

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convenience stores rose by a 4.5 percent outperforming pharmacy, liquor and grocery.
The primary driver of convenience stores is food which accounts for the highest
proportion of the sales. Another contributor to convenience sector is the sales of
tobacco. However, it is illegal to sell packaged alcohol in a convenience store in
Australia. Convenience stores in China are not as strong as in Australia although the
convenience stores in China are experiencing moderate growth.
The development of convenience stores in China remains unbalanced with
specific places such as Guandong and Shanghai having the highest concentration. In
essence, convenience stores are more developed in the coastal region than in the
inland areas. There are no leading players in the convenience stores in China like it is in
Australia. In China, Most convenience stores operate regionally (Chen et al 2015).
China’s convenience stores players constantly transform and re-invent to keep up with
increased competition. Besides, most convenience stores focus on fresh produce and
private label as their differentiating factor.
Luxury products retail sector
The Australian luxury retail industry has been growing gradually over the past
five years. The luxury retail sector in Australia is protected from financial instability that
has crippled the global retail sector. The primary drive that encourages growth in the
Australian luxury retail sector is demand increase attributed to tourism (Mao and Huang
2016). Another factor that encourages growth in this sector is market polarization.
Competition is likely to increase as new businesses set up boutique stores. The
Australian Luxury retailing industry success factors include proximity to key markets,
attractive products display and clear market position. On the other hand, the sales of
luxury products in the retail market in China fell in 2016 although it continues to be a
major player in the Global luxury market accounting for 30% of luxury purchases in the
world. The Chinese government have placed stringent measures to curb grey market
while attempting to stimulate domestic consumption (Clemes, Gan and Zhang 2010).
The Luxury retail market in China is characterized by e-commerce and mobile
shopping as one of their influential sales channels. Several players have since adopted
social networking sites as their marketplace to influence trends in the luxury retail

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market in china. Some players in the Luxury products market have since decided to
expand their portfolio to increase their income streams.
E-commerce
China’s ecommerce market is the largest in the world. It comprises of business to
customers segments as well as customers to customers segments. The online retail
industry in China continues to grow despite slow growth in the economy (Ortega et al
2016). The speedy growth in the internet market is attributed to a large population of
internet users and online shoppers. A significant proportion of online shopping
transaction were made from mobile devices. This is influenced by the widespread of
third party online payment platforms. The government is particularly interested in
growing rural online market as urban online marketplace nears saturation. The social
media sites are becoming the new marketplace for doing business. Famous people on
the internet are influencing the online retail industry in China by using their huge
followings to introduce new brands and create awareness especially in the fashion
industry. The e-commerce retail industry in China depends on customers to business
model which allows customers to develop relationships with businesses to improve
product quality and create loyal customers (Mena and Bourlakis 2016).
While online retailing industry in Australia is not as big as China’s, it has had its
fair share of successes. This is because online shopping in Australia had increased with
online spending outperforming traditional retailing by over 16 percent. The Australian
online markets expects one out of ten products to be sold online. Although the
Australians spend more on online purchases, they tend to spend less per purchases as
a result of increased competition in the ecommerce landscape. The online marketplace
is continuously growing with more people expected to make purchases online. The
success of online retailing in Australia is pegged on new forms of payment services that
facilitate online shoppers to make purchases easily. Online marketplaces are here to
stay and adopting to these changes in the retail industry plays a significant role in
helping businesses grow and increase their market share (Ortega et al 2015). Majority
of online shoppers are becoming comfortable with making purchases online unlike
before where consumers did not have trust whether their information was safe or

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whether they are going to receive the product that was ordered. Online sales events are
influencing e-commerce trends in the retail industry. Shoppers would rather wait for an
event to make their purchases at discounted prices. There are several items that
Australian shoppers are purchasing online which include fashion, health and beauty,
home wares and appliances, hobbies and recreational products, media and specialty
food and liquor.
Cross-border e-commerce
Cross-border e-commerce has thrived in Australia as a result of huge buying
online population. Besides, cross-border transactions are facilitated by mobile platform.
Online Australian consumers are particularly comfortable with cross-border e-
commerce. The Australians are more likely to shop from abroad. This category of
consumers particularly purchase from the US, UK and China (Kumar, Heustis and
Graham 2015). The slow speed with which comes with cross-border purchases does
not discourage Australians from doing cross-border trades. Moreover, Australians are
more likely to sell to other countries such as China and the United States. On the other
hand, Cross-border e-commerce maintains a significant growth since many Chinese
consumers are likely to purchase goods from other regions. The main products that are
particularly sold in cross-border e-commerce include personal care products, baby and
maternity products as well as food. The government of China plays a significant role in
establishing policies that govern cross-border e-commerce. The government supports
cross-border e-commerce through providing cheaper and faster way of foreign brands
to reach the local market in China (Pan and Laws 2003).
Competition
The competition landscape in China is characterized by low growth among the
top retailers in China. The local retailers in China outperformed foreign retailers.
Further, the ecommerce players in China are also expanding fast with significant growth
witnessed among companies such as Alibaba and Wal-mart. Tough market
environment, rising cost of rent and labor have contributed to challenges facing physical
retailers leading to their closure. Unless the players adopt to e-commerce among other
strategies, store closures will continue to be witnessed in China’s retail sector as a

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result of increased competition. Smaller-scale retail formats experience higher growth
when compared to large-scale retail formats.
Carrefour growth in China’s retail sector attests to the stiff competition that offers
higher growth among small-scale retailers. On the other hand, competition in the
Australian retail sector has continued to increase which has necessitated some fashion
retailers to pull out of the market citing stiff competition from global players. The
globalization of retail industry is attributed to new players entering the Australian market
(Price 2016).
These new players are influential because they influence price points and speed
to market. For instance, big brands such as H&M and Zara have the capability to move
with speed in ensuring their products are available in their stores weeks after a fashion
runways. Local fashion brands in Australia can take up to a year after a runway to
launch products in their stores. The increased competition encourages Australian
consumers to shop from online retailers to get the latest designs and preferences in
fashion. Australian small-scale retailers are performing poorly than their Chinese
counterparts. For this reason, they are required to adopt to the changing business
model in order to increase their efficiency and relevance to be able to compete with
global players (Schlegelmilch 2016).
The domestic small-scale retailers are being kicked out of business as a result of
international companies being preferred by landlords as a means of reducing their risk.
An example of this scenario is when H&M was allocated 6000 square feet a move that
displaced several small-scale domestic retailers in the fashion industry. These small-
scale domestic businesses should adopt to the increasing competition by meeting
consumer needs with respect to price, quality goods and services as well as speed
(Simshauser and Whish-Wilson 2017). Competition in Australia has led to companies
strategizing by introducing new range of products as well as enhancing consumer user
experience while conducting their shopping in the stores. Experiential retailing is a
concept that is on the rise as strategy to gain competitive advantage over other players
by introducing programs that engage consumers such as free yoga.
Differences in the retail industry between China and Australia are centered on
the trends that are taking place at the moment and how these two countries respond to

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the changes. China is said to be on the forefront of championing new retail trends while
other economies such as Australia continue to follow and implement some of the trends
that are already rolled out in China. Various aspects contribute to the changes that
influence the retail industry in Australia. Among these factors include, economic, social,
technological and changes in the consumer tastes and preference (Shankar et al 2016).
Major trends in the retail industry in Australia is mainly attributed to change in business
model such as direct consumer, new channels, globalization, Omni-channel,
fragmentation and experience stores.
In the technological sector, mobile shopping lays a significant role in how
consumers purchase products. Availability of information makes it easy for businesses
to conduct extensive analysis on their market to determine what their customers want,
Social networking sites have also contributed to influencing purchase patterns among
Australian consumers. The efficiency of artificial intelligence has contributed to
influencing how consumers conduct themselves in the market. The last aspect shaping
the retail industry in Australia include customer expectation such as shrinking
household, millennials, diversity in the workplace, personalization, convenience and
emergence of new channels. Technology adoption in the retail industry in Australia has
evolved over time (Sutton-Brady, Kamvounias and Taylor 2015).
The earliest technology in the retail sector was introduced in the 90s where
businesses were introduced to the data technology in supply chain and logistics.
Further, in 2000s the retail sector was introduced to data technology in advertising
digital patterns and in 2010s the industry was introduced to data technology focused in
demand data, social and machine learning. Increased digitization in the industry has
contributed to disruptions in the market ranging from mobile phones, social media, pay
TV and digital advertising. The future of retail industry in Australia is likely to be
disrupted further by other technologies such as blockchain in the supply chain process.
The future of retail industry in Australia will require innovations in the checking out
systems. The complex procedures in some e-commerce platforms encourage poor user
experience which often leads to shopping carts being abandoned or lost in the process
(Tamm et al 2015). Therefore, it is important that businesses work towards streamlining

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their checkout system with minimal steps as possible to encourage consumers to
purchase products online with ease.
There are a number of benefits that a business is likely to enjoy with an efficient
checkout system. Among these benefits include increased usability and consistency. A
business is likely to enjoy lower costs on developing a checkout system that increases
conversion rate. Increased security in the payment systems is significant in helping a
business secure their payments from fraudsters. Amazon.com continues to put pressure
on other retail companies in Australia forcing businesses to restructure their business
model so that they experience minimal competition form Amazon which is a giant in the
online retail industry.
When it comes to the future of retail industry in China, the country seems to be
on a level of its own. The growth in the online sector continues to surge outperforming
the overall retail sector. China has the highest online penetration population in the world
which encourages its retail sector (Theurillat and Donze, 2017). The leading e-
commerce retail store is headquartered in China with over half a billion consumers
shopping in the market place. Jack Ma, the founder of Alibaba.com introduced a new
concept that is widely known as “New Retail”. This concept goals are disrupting the
supermarkets and convenience stores by involving merchants and consumers to
actively participate in shopping activities. Alibaba.com the largest online market place
introduced Hema supermarkets whose main attraction is smartphone-powered
experience. Consumers can access products through their smartphones as well as
make payments through the company’s payment system (Ting 2015).
More so, customers can have the opportunity to pick their fresh grocery and have
them cooked or prepared to be eaten in the stores (Booth and Whelan 2014). Besides,
people living close to the supermarkets can order their products and have them
delivered to their premises in the shortest time possible. The new retail has also
revolutionized car shopping where by the company allows consumers to use a vending
machine to pick a car and test drive it for three days while still making the decision of
whether to purchase the car. These technological changes in the way consumers
approach shopping has been termed as game changer as various businesses are

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adopting to the new ways of enhancing shopping experience to attract more sales
(Tian-Foreman 2009).
Besides, Alibaba Group has also developed an application that digitizes the
inventory management by letting proprietors know what is out of stock and by how
much are they supposed to order. This application will revolutionize convenience stores
and assist them to be more appealing and consumer driven. Mall shopping has also
been disrupted by the new retail concept. Most people often find products they want in
the shopping malls but not to their preference in terms of size and color. As a result,
Alibaba’s new initiative helps malls stores to have virtual shelves where customers can
order the specific products that they require and have the stores deliver them to the
location provided by a consumer.
New technologies in the retail industry enables consumers to scan QR codes
when ordering for food and the customers can collect their food from food lockers in the
restaurants. E-commerce industry in both China and Australia has introduced various
changes that are likely to contribute to the convergence of social, mobile and e-
commerce online as a well as offline. Omni-channel is one of the mediums in which
retail industry is going to grow in both countries. The current and upcoming retailers
need to consider customer experience as a top priority to be able to compete favorably
in the retail market (Wrigley and Lowe 2014). Both retail sectors in Australia and China
need to make use of various analytic tools to understand their consumers and market
better to be able to deliver.

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