Future of Retail in Australia

The main aim of this paper is to study the future of retail stores in Australia. The rise and growth of ecommerce has led to a decline in the popularity of traditional brick and mortar retail stores in Australia. The easy availability of the internet, along with technological advancement has made it possible for various companies in the retail industry to venture online.

Running head: FUTURE OF RETAIL IN AUSTRALIA
Future of retail in Australia
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Executive summary
The main aim of this paper is to study the future of retail stores in Australia. The rise and growth
of ecommerce has led to a decline in the popularity of traditional brick and mortar retail stores in
Australia. The easy availability of the internet, along with technological advancement has made
it possible for various companies in the retail industry to venture online. Online retail stores, as
research shows, provides a greater variety of products and services to its customers and at lower
and more affordable rates. As such, customers are more likely to buy their products online
instead of going to the hassle of visiting traditional stores. The paper analyzes the future of the
retail industry and the prevalent trends from the point of view of Coles Australia, which is one of
the most well known and beloved supermarket and retail stores in the country. The brand has
over eight hundred retail outlets in different regions of Australia; however, the company is now
facing tough challenge from new entrants into the market and online retail stores, which has
affected its competitive positioning in the market. The paper analyzes five peer reviewed
academic journals, which discuss about the future of retail, with special emphasis on the impact
of ecommerce on retail industry. Four out of the five papers speak about the adverse impact of
ecommerce on retail industry and how the arrival of the internet has completely revolutionized
the way retail industries function. One paper, which has been discussed in details below, stresses
on the relevance of the traditional brick and mortar stores. According to this article, although
retail stores have been substituted by online stores and applications, the former still manages to
retain its relevance. This paper analyzes the future of retail stores from the point of view of
Coles, thus highlighting its strategic issues. Accordingly, recommendations have been provided
to improve the market position of Coles and for improving its online presence. The objectives of

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this paper are – to study the future of retail with relation to traditional brick and mortar stores, to
analyze the strategic issues at Coles and to present recommendations for improvement for Coles.

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Table of Contents
Introduction:....................................................................................................................................4
Discussion:.......................................................................................................................................4
Current operations and issues faced by Coles.............................................................................4
Analysis of the issues faced by Coles and the future of retail in Australia.................................4
Solutions and recommendations for Coles..................................................................................6
Conclusion:......................................................................................................................................7
References:......................................................................................................................................7

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Introduction:
The rise in technological advancements, ecommerce and the advent of the internet has
completely revolutionized the field of retail and commerce. The concept of brick and mortar
stores has become relatively obsolete nowadays. This is because the present generation of
customers prefers to do their shopping online and through applications available on their
smartphones, instead of actually visiting stores. In Australia, the retail industry has been affected
by the various disruptive forces which include changing market trends, evolution of customer
demands and expectations and changing buying behaviors and patters of the customers.
Moreover, a large number of international businesses have penetrated the market, which affects
the retail industry. Additionally, customers have become all the more tech savvy, busy and
affluent. They have sky high expectations from retail stores and are not willing to settle for less.
In the following report, the future of the retail store in Australia will be examined with respect to
Coles Australia.
Discussion:
Current operations and issues faced by Coles
Coles was founded in the year 1914 and is one of the most well known supermarket,
consumer and retail services in Australia. The company has its headquarters in Melbourne and
has over 800 retail outlets in different regions of Australia. Coles has been one of the most
beloved retail stores for Australians, providing daily and basic amenities at pretty reasonable
prices. As of 2017, the annual revenue for Coles has been approximately 35-40 billion Australian
dollars. If one is to study the current operations of the company, it can be said that market

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competition is one of the most potent threats in the long run. According to Balasescu (2014), the
innovation in the field of ecommerce along with the implementation of state of the art
technology has completely altered the retail industry and even poses a serious threat to its future.
The article is a detailed explanation on the nature of retail, and how the modern trends can be
applied to it. If the principles of the article are applied to Coles, it can be said that it faces severe
competition from various other retail stores like Aldi. Moreover, the retail industry in Australia is
also open to new entrants. As a result, several international brands have made their way into the
market thus affecting the sales rates and profitability of Coles. Although the online retail industry
in Australia is still in the exponential phases, it can be said that they too pose a challenge to
Coles and its current operations. Coles Australia has also been facing a number of logistical and
technological challenges which have rendered them outdated and on the verge of becoming
obsolete.
Analysis of the issues faced by Coles and the future of retail in Australia
Gregory (2015) is of the opinion that the Internet of Things has completely altered the
retail industry by reducing the significance of brick and mortar retail stores. According to the
author, internet connectivity and easy access to devices have changed the way customers live and
shop, thus changing whole industries. The Internet of Things has certainly added more
connectivity and intelligence to the way consumers perceive retail industries. Moreover, this also
paves the way for more relevant customer related information which can further be incorporated
into business operations. Commonly known as big data, this information can be used to improve
the overall operations of the business, provide better service to customers and also shape the
business for future changes. The Internet of Things is an innovative new concept which holds a
world of opportunities for the retail industry. It has now become possible to connect customers

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and business activities in the digital realms. There are essentially three areas in which the retail
industry would be affected by the incorporation of internet of things – the supply chain, the
customer experience and generation of more revenue streams and newer channels. Internet of
things would allow retail stores to communicate and interact with their customers in real time,
enabling bidirectional communication transactions. One of the major factors that promoted the
concept of Internet of Things is the increasing popularity of the smartphone. However, in the
case of Coles Australia, the same old brick and mortar stores have begun to lose their charm. In a
world where Internet of Things and the use of superior technology enables customers purchase
their groceries and other items online, Coles may observe a significant decline in customer
retention and customer satisfaction rates. Unlike online retailers powered by the Internet of
Things, Coles is unable to gather optimized data on customer needs and demands. In other
words, they are unable to provide customized service delivery which plays a key role in customer
satisfaction and retention.
According to Steel et al. (2013), the rise of ecommerce has had an irreversible impact on
the conventional retail industry in Australia. The article claims that in New Zealand in 2011,
consumers had spent almost three billion dollars online, which rapidly grew to almost four
billion dollars in the upcoming fiscal year. The article identifies that there are two main benefits
that online retail offers to customers, which makes them opt for ecommerce websites and
applications over brick and mortar stores. They are – the variety of products available on online
stores and the lower price rates offered. In the context of New Zealand the rest of Australia, these
two factors play a crucial role. Through online retail stores, customers would easily be able to
browse through a variety of goods that may not be available in traditional stores. Moreover, they
would also be able to get discounts and offers, which are profitable for the customers. With

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benefits like this, there is no reason as to why customers would prefer traditional brick and
mortar stores over online retail stores. This is also one of the reasons why the popularity of Coles
as Australia’s premium retail store has declined. Coles has maintained its service and product
quality at a consistent rate. They have a definite range of products, which have remained almost
unchanged over the years. As such, customers are finding it more beneficial to use products sold
online, since they guarantee better variety and more improved quality and service delivery.
Ramcharran (2013) is of the opinion that there are a few factors which have contributed
to the change of the retail industry structure. The growth and rise of ecommerce has altered the
shape and size of the retail industry worldwide. The ecommerce industry with respect to retail is
still a developing industry, with opportunities for low market shares and fast growth. A large
number of online retail stores are also offering services like drone shipping and same day
delivery. Low transaction expenses and the proliferation of fields like information technology
have also made it easier for retailers to venture into ecommerce. Coles has indeed taken requisite
measures to incorporate online shopping as part of its services. But Coles Online is not a very
reliable platform for the customers. It is not interactive or optimized to meet the needs of the
customers. Moreover, Coles Online is mainly restricted to its grocery shopping, which may
prove to be inconvenient for the customers.
However, a different view has been provided by Dorman (2013). According to this
author, the rise and growth of ecommerce has certainly altered the course of the retail industry.
As a matter of fact, internet and information technology plays an integral role in multi channel
online retail. As a result, a number of customers are choosing to buy their goods online, instead
of brick and mortar stores. As a consequence, the future of traditional retail stores was under
scrutiny. Yet, the author claims that retail stores at present may have observed a marked decline

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in revenue outcome, but they still remain relevant. The author opines that brick and mortar retail
stores are indispensable as far as direct to consumer business models are concerned. Coles,
despite the numerous market challenges, has managed to retain a large number of its loyal
customers. They have implemented a loyalty program which remains a favorite amongst their
customers.
Solutions and recommendations for Coles
Based on the analysis of the future of retail stores in Australia, some strategic
recommendations can be made for the company:
 Coles will have to take adequate measures to collaborate and coordinate its strategic
policies with that of customer taste. A generalized customer service policy would be
insufficient in meeting the needs of the customers. The retail customers today are tech
savvy and have very high expectations from brands like Coles. As such, the company
would have to incorporate information and data related to customer needs into its
strategic operations. This can be used to improve its supply chain and quality of service
delivered to customers.
 Coles would also have to take measures to improve its online presence. Coles Online at
present is quite a primate online application, which would have to be improved.
Increasing the variety of products sold online, lower pricing strategies and improved
website interface would help in enhancing the competitive positioning for Coles.
 Internet of Things or IoT may be incorporated by Coles as part of its online retail. IoT
would not only improve the delivery of service to customers but also make it cost
effective. It would also provide in depth insight into customer buying behavior and
motivational factors, which could further be used to improve customer satisfaction rates.

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Conclusion:
To conclude, it can be said that the traditional retail industry faces a tough challenge in
the future, owing to a rise of ecommerce and online retail stores. For brick and mortar retail
stores like Coles, the growth of ecommerce poses a severe threat. The lack of improved online
stores and the myriad benefits that online retail stores offer has reduced the profitability and
affected the sales of stores like Coles. The above article analyzes the future of retail in Australia,
providing viewpoints for and against the argument. Accordingly, the situational analysis of Coles
has been provided along with the strategic issues it has been facing. Recommendations have also
been provided to improve the online presence of Coles.

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References:
Balasescu, M., 2013. The influence of innovations and technology on the future of retail. Bulletin
of the Transilvania University of Brasov. Economic Sciences. Series V, 6(2), p.9.
The research article focuses on the impact of technological advancement and innovative
ideas like ecommerce on the future of the retail store.
Dorman, A.J., 2013. Omni-channel retail and the new age consumer: An empirical analysis of
direct-to-consumer channel interaction in the retail industry.
This article studies the relevance of traditional brick and mortar retail stores in the age of
ecommerce and technological advancement.
Gregory, J. (2015). The Internet of Things: revolutionizing the retail industry. Accenture
Strategy.
This article explains how the Internet of Things has revolutionized the retail industry by
improving quality of service provided to the customer.
Ramcharran, H., 2013. E-commerce growth and the changing structure of the retail sales
Industry. International Journal of E-Business Research (IJEBR), 9(2), pp.46-60.
This article emphasizes how the growth of ecommerce has completely altered the field of
retail industry, affecting its sales and profitability.
Steel, W., Daglish, T., Marriott, L., Gemmell, N. and Howell, B., 2013. E-Commerce and its
effect upon the Retail Industry and Government Revenue.

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This article emphasizes on the fact that ecommerce has affected the revenue generation of
various retail industries, by altering the way customers perceive traditional retail stores.