Holmes Institute Retail Management: Australian Retail Analysis Report

This report provides an in-depth analysis of the Australian retail industry, examining its current state and future prospects. It begins with an overview of the retail landscape, highlighting major players like Woolworths and Coles, and discusses key developments such as the adoption of technology, including e-commerce and mobile applications. The report identifies key drivers of change, including shifting consumer expectations, the rise of online shopping platforms like Amazon, and the impact of social media. It then explores the future face of Australian retail, including virtual reality shopping experiences, robotic assistance, and omnichannel payment systems. The report concludes with recommendations for retailers to adapt to the evolving market and enhance the in-store experience to maintain a competitive edge. The report is intended to explore all these changes and developments impacting the Australia retail industry towards progression in retail life cycle.

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RETAIL MANAGEMENT

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Executive Summary
This report outlines about Australian retail industry including the major changes and
development, drivers for the respective changes, and its future face. The retail industry of
Australia contributes nearly 4.5% to its GDP where the retail sales grew 3.7% in September
2018. Woolworths and Coles are two of the major Australian retail players dominate the
market and thus making it duopolistic in nature. However, with entering of other players in
the market such as Aldi and Costco, the competition is getting more intense with creating
threat for the small convenience stores.
The key driver of retail format change in Australia includes change in technology with
shifting purchase through online and mobile applications, rise of e-commerce platforms,
changing customer expectations and experience, self-service automation, and influence of
social media. Consumer preference and behaviour is the another driver in relation with the
retailing system of Australia.
The future face of Australia retail industry is also changing with virtual reality in shopping
experience, shop bots, smart mirrors, Omni channels payments, beacons and robotic
assistance in the stores. This report is intended to explore all these changes and developments
impacting the Australia retail industry towards progression in retail life cycle.

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Table of Contents
Introduction of retailing system in Australia........................................................................3
Major developments and changes in Australian retailing system.......................................3
Key drivers of a retail format change in Australia...............................................................4
Future face of retailing in Australia.......................................................................................5
Conclusion and Recommendations.........................................................................................7
References.................................................................................................................................8

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Introduction of retailing system in Australia
There is an intense competition in Australia retail industry controlled by some major players
and big enterprises. Retail Trade is Australia's second largest employment sector with
generating 10.7% of employment (pc.gov.au, 2011). Various international players like Aldi
and Costcof also coming in the retail industry of Australia with their competitive strategy and
influencing domestic companies and brands including Coles and Woolworths. One of the
trends in Australian retail sector is the discount stores where they sales retailing products
under one store. One of the biggest discounting department until stores is Big W under
Woolworths where merchandise products are easily available at one stop shop
(annualreports.com, 2013). The conversion of department into store was one of the major
change in Australian retail industry identified in the 19th century allowing consumer to
purchase a large number of consumer goods under one umbrella and roof while matching
with consumer preferences and trends.
Major developments and changes in Australian
retailing system
The major development and retail changes in Australia can be seen with adoption and
evolution of technology. For instance, supply chain and logistics management are interlinked
with the ERP technology introduced in 1990 to create more efficiency in the internal process.
Later on, digital matrix advertisement technology was introduced in the year 2000 (Goodman
and Coiacetto, 2012). The year 2010 was known to be as biggest evolution for technological
advancement in retail sector as there was introduction of data technology comprising social
and machine learning, demand data analysis and much more capable of analysing changing
consumer preferences and behaviour relating to their shopping habits. The technology
changes over the year also show about increasing competition in the retail system as the
industry offers varieties of products relating to consumer and electronic markets, grocery
segment, fashion and apparel products. The retail system is wholly changing with
introduction of digitalization and new technologies such as cloud computing. With regards to
this, one of the major emerging change in relation with Australia retailing system is rise of
online shopping and e-commerce system. The retail business and market share is taken away
by one of the leaders in online shopping business i.e. Amazon. It was found that Amazon
assaulted on the 100$ billion grocery and food marketplace with pacing up pressure on Coles

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and Woolworths by adding beverages and food to its non-food pantry collection (Mitchell,
2018). In 2017 annual conference at Woolworths, chairman Gordon warned grocery and food
suppliers with selling their products on Amazon while dropping control over prices and
losing business with the major chains.
Key drivers of a retail format change in Australia
At current pace, the retail and consumer expectations are shaped by greater convenience and
personalization and today's retailers must know about all the trends which are highly relevant
to their business and those developments creating a major impact on the strategies – now and
in the future.
The first key driver in the Australia retail change includes technology which includes
purchase of products through online market and mobile applications. For various retailing
companies, the online business has created various opportunities while providing consumer
with higher convenience and accessibility. For instance, Coles brings its mobile application
as a handy shopping assistant allow customers to purchase products with Cole’s catalogue.
Since launching in 2011, the Iconic, an Australia e-commerce fashion retailer has been
recognised as an innovator and help the company to get ahead of curve when it comes to
mobile and online shopping (Pidgeon, 2018). The managing director of the company also
stated in a Vivid Sydney event that he predicts 80 per cent of sales will come from apps in
future allowing sales personalisation to each and every customer (Cooper, 2017).
The e-commerce is the next key driver where Amazon has changed the whole scenario of
retailing system with increasing the consumer preference towards online shopping. Amazon
Australia grows profits more than 1500% and this shows various opportunities for the
companies to invest in online platform while reducing tradition way of retail selling such as
physical stores and departmental stores (Powell, 2019). The company is also on the way to
dominate Australian retail within seven years and currently getting on board with native
brands. Amazon’s waves already being touched across Australia’s retailer and for future, the
company sets the bar in relation to convenience and price, if not range, so much rest on on
where their core rivals place themselves.
The next driver of retail format change in Australia changing consumer expectations as due to
increase in bargaining power with presence of a lot of suppliers, each and every consumer is
looking for discounting prices and most of the big brands are competing on the basis of

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providing products to the customer at lower prices so as to gain higher market share. In
addition, the consumers in Australia now seeks for more choices and flexibility from the
retail markets for the approach they shop and pay for their buying. Paving the way is retail
technology from Afterpay launch in 2014 allows customers to select how they pay
(business.nab.com.au, 2017).
Automation of self service is another key driver that has been integrated into day to day
operations of Australian retail companies. The major retailers including Coles and
Woolworths have come up with automated ordering and self-serve checkouts, while shelf-
ready packing has condensed double handling and the time it takes to store shelves in the
superstores. This new technology has helped Australian grocery and superstore retailers to
decrease their yearly wages problem to the lowest level from the time 2004 with rising sales
over the last year.
One of the significant drivers includes impact of social media. It was found that retail brands
have the biggest customer size on Facebook showing that social network will continue their
key focus for the anticipatable future towards attracting more and more number of users
towards purchase of their products. As per data, the typical Australian retail brands on
Instagram created 1,060 connections per post in 2017 boosting the engagement in terms of
these interactions. With regards to this, an study of 175 million user connections across
179,587 pieces of brand information generated by 15 retail brands from the country
(unmetric.com, 2019).
Future face of retailing in Australia
The future of the Australia retail sector is formed by disruptive forces and changing
technologies like varying spending patterns of the Australian customers, virtual reality in
shopping experience, shop bots, robotic assistance in stores, automated checkouts, beacons,
Omnichannel payments as well as advent of foreign corporations who bring with them a
whole new way to retailing.
Considering virtual reality in shopping experience, it is a technology one can easily find in
gaming, movie theatres and education. However, engaging VR in retail is predicted to reduce
product returns, marketing costs, and provide efficient analytics and data. Toms Shoe

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Enterprise is one of the biggest examples of VR for retail. It was found that company put
Samsung VR headset into 100 of their stores with a publicity video and thus creates stirring
experience for the consumers (Greenwald, 2016). In 2017, Alibaba also introduced their
version of VR shopping experience allow customer to walk into stores and buy products.
Hence, in future, integrating VR into retail has various upsides.
In store robotic assistant and retail robots can also revolutionise the shopping experience in
Australia with offering various recommendations to the consumers relating to products,
discount codes with finding breakpoint in the consumer service. The “humanoid robot
market” is expected to reach $13.4 billion by 2026, rising at a CAGR of 51% from 2017.
According to willrobotstakemyjob.com, there is a 92% chance that retail salespersons will be
replaced by machines (Boyd, 2019).
Considering automation checkouts, various retailers can come out in future with radical
changes in the way consumer are provided utmost convenience with shopping while
eliminating queues. Automation in checkout can be considered as major technology based
revolution. Although more than two-thirds of individuals still wish to shop in-store, more
than 70% of surveyed customers said the checkout experience is their prime pain point while
shopping in superstores (Northe, 2017) and some of the companies like 7-Eleven already
rolled out this new revolution.
The next big thing is Omnichannel system that includes the integration of online and offline
stores so as to offer premium customer experience. The three ways payments in bricks and
mortar stores are likely to change in the future of Omnichannel retailing includes
smartphones, rewards system and checkout free stores. Beacon technology can also be proved
as a valuable technology to the Australian retailers enabling them to provide superior
customer experience with boosting of consumer loyalty. Using beacons, retailers can also
identify high-traffic positions in their store, and then optimise store and merchandise layouts,
and product placements based on navigational patterns. In fact, the technology has gained so
much popularity that its forecast 400 million beacons will be shipped by 2021, according to
ABI research (Bay, 2016).

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Conclusion and Recommendations
Retailing in Australia showed a relatively subdued performance from past few years.
However, many retailers are facing growing pressure due to changing consumer behaviour
and patterns. Due to this challenging competitive pressure, number of iconic brands have
recently exited the marketplace with the increasing migration of consumers to online
shopping. It is now important to each and every retail supermarket, chains and retailer in
Australia, to realise the latest marketplace trends and discover sources of future market
development and hidden opportunities to plan the corporate strategy. In relation with
recommendations, the retailing companies can enhance the in-store experience as big retailers
can easily provide a great shopping experience to the users coming to buy in physical stores
as it will provide them a competitive advantage from e-commerce retailers. This in-store
experience can be provided with the help of integrating advanced technologies to the
operational area of the floor (such as automated checkouts, robot assistance) and background
process (like RFID technology). The retailers in Australia can also use social media as a
competitive tool for the purpose of attracting consumers through various promotional and
marketing activities and encourage customer engagement practices. It will also help the
company to increase brand awareness and loyalty among various consumers.

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References
annualreports.com (2013) Woolworths Limited [ONLINE] Available from:
http://www.annualreports.com/HostedData/AnnualReportArchive/W/ASX_WOW_2013.pdf
[Accessed 31/08/2019].
Bay, O. (2016) ABI Research Finds the Future of BLE Beacon Shipments is Not in Retail
[ONLINE] Available from: https://www.abiresearch.com/press/abi-research-finds-future-ble-
beacon-shipments-not/ [Accessed 31/08/2019].
Boyd, C. (2019) How Retail Robots Are Revolutionising the Shopping Experience [ONLINE]
Available from: https://medium.com/swlh/how-retail-robots-are-revolutionising-the-
shopping-experience-39bffcf911d8 [Accessed 31/08/2019].
business.nab.com.au. (2017) The FUTURE OF RETAIL [ONLINE] Available from:
https://business.nab.com.au/wp-content/uploads/2017/09/The-future-of-retail-September-
2017.pdf [Accessed 31/08/2019].
Cooper, R. (2017) 4 retailers with great mobile apps [ONLINE] Available from:
https://www.retailbiz.com.au/from-editor/4-retailers-great-mobile-apps/ [Accessed
31/08/2019].
Goodman, R. and Coiacetto, E., 2012. Shopping streets or malls: Changes in retail form in
Melbourne and Brisbane. Urban Policy and Research, 30(3), pp.251-273.
Greenwald, M. (2016) 6 Of The Best Marketing Uses Of Virtual Reality [ONLINE] Available
from: https://www.forbes.com/sites/michellegreenwald/2016/06/15/6-of-the-best-marketing-
uses-of-virtual-reality/ [Accessed 31/08/2019].
Mitchell, S. (2018) Amazon undercuts Woolworths and Coles on food and grocery prices
[ONLINE] Available from: https://www.afr.com/companies/retail/amazon-undercuts-
woolworths-and-coles-on-food-and-grocery-prices-20181126-h18ckr [Accessed 31/08/2019].
Northe, A. (2017) The Future of Checkout: How Retailers are Innovating the Payment
Experience [ONLINE] Available from: https://www.shopify.in/retail/trend-watch-the-death-
of-the-checkout-line [Accessed 31/08/2019].

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pc.gov.au. (2011) Economic Structure and Performance of the Australian Retail Industry
[ONLINE] Available from:
https://www.pc.gov.au/inquiries/completed/retail-industry/report/retail-industry.pdf
[Accessed 31/08/2019].
Pidgeon, E. (2018) The four golden lessons of founding a multi-million-dollar fashion empire
[ONLINE] Available from: https://www.theceomagazine.com/business/innovation-
technology/fire-faster-the-four-golden-lessons-of-running-a-multi-million-dollar-fashion-
empire/ [Accessed 31/08/2019].
Powell, D. (2019) Amazon Australia grows revenue more than 1500% but remains a “small
proportion” of the retail market [ONLINE] Available from:
https://www.smartcompany.com.au/industries/retail/amazon-australia-revenue/ [Accessed
31/08/2019].
unmetric.com. (2019) 7 Social Media Trends in the Australian Retail Industry [ONLINE]
Available from: https://unmetric.com/resources/social-media-trends-in-the-australian-retail-
industry [Accessed 31/08/2019].