Australian Retailers Turning to Tech to Fight Amazon; Amazon Syphoning Customers from Other Retailers

RetailTechNews’ weekly Amazon Watch brings you some of the company’s biggest moves from the past seven days, analysing how the giant is revolutionising the retail space. In this week’s edition: Australian Retailers Turning to Tech to Fight Amazon; Amazon Syphoning Customers from Other Retailers; and Amazon’s Private-Label Medications.

Australian Retailers Turning to Tech to Fight Amazon

Australian retailers are looking to technology in order to compete with Amazon, which moved into the country last year.

The entry into the market stands to drive local retailers to focus on segment-specific knowledge, increasing investment in technology in a bid for market survival. Australian retail shares have fallen sharply since the tech behemoth confirmed plans for the country in April 2017, with shares of top department store operator Myer Holdings Ltd down 30% since that time.

Retailers must realise that competing against Amazon for most standard goods on price is not viable, and instead should ensure that they provide their customers with a differentiated experience by investing in technology.

Online retail is set to increase its share of the market from 7% to 10% by 2021, something which obviously plays to Amazon’s strengths. If retailers want to survive, they need to focus on building brand connections in a way a global behemoth like Amazon cannot.

Amazon Syphoning Customers from Other Retailers

Amazon is spiriting away share of apparel sales from Target, Macy’s and J.C. Penney, according to a report by Coresite Research. Amazon Fashion is tied with Target as the second-most shopped apparel retailer in the U.S., behind Walmart, as measured by number of shoppers, the survey found. More than 20% of respondents said they have switched more of their apparel spend to Amazon and away from Macy’s and J.C. Penney.

Amazon’s fashion business is underpinned by those who are already members of the site, according to the survey. While 46% of all apparel shoppers surveyed said they had bought clothes or shoes on Amazon in the past year, almost two-thirds of Prime members had done so.

The findings come as traditional retailers struggle to boost their sales, especially in apparel, which has seen outlays shrink. Americans spend just 3.1% of their household budgets on clothing, according to government data, shifting dollars to travel, technology, and experiences.

Online upstarts and low-cost fast-fashion chains have drawn trend-conscious consumers in search of value away from department stores and full-price retailers. Retailers have been taking a huge hit on prices, though a 1.7% gain in January offered some solace, according to the latest government inflation report.

Amazon’s Private-Label Medications

Amazon is continuing its expansion into the pharmaceutical market in the U.S., selling an exclusive line of over-the-counter medications and health care items in a further challenge to traditional drugstore retailers.

The line, ‘Basic Care’, is sold on Amazon alongside name-brand medications, though it is not owned by Amazon. This move comes as analysts continue to predict Amazon will make a significant play in the pharma market, which is predicted to be valued at USD$497bn (£358bn) in 2020.

Amazon could incorporate pharmacies into its Whole Foods grocery stores, as well as into its Prime and Prime Now operations. However, there have been doubts cast over how serious a move into the sector will be for leaders such as Walgreens Boots Alliance. This is due to the fact that the sector is so heavily regulated, and there are numerous other verticals across the globe that Amazon could move into with a more simple process.