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No threat from Amazon

  • Opinion
  • April 5, 2017
  • Paul Keane
No threat from Amazon

Amazon recently made an announcement that their imminent entry into Australia would kill local retailers. How seriously do we take Amazon’s threats? There have been a number of like statements over the years.

The introduction of weekend trading

When Saturday shopping was signalled to the market in the early 1980s, a large majority of retailers from across the country opposed the move as a serious interruption to people’s lives; particularly sport on Saturdays that would decline due to parents having to work. The debate went on.

When stores were allowed to open on Saturdays, the success of the trading hours expansion evolved and Sundays were then permitted. Weekend retailing is extremely successful and here to stay. It simply gave people the opportunity to shop as a family when they wanted to rather than when they had to, due to limited hours trading. There was no negative social impact; rather it has been embraced as a key element in our daily lives.

Despite worries sport has remained a key element in Kiwi’s lives, and major rugby matches have simply shifted from the traditional Saturday afternoon, to evenings when crowds will attend. Furthermore, it significantly improved employment with retailers needing more staff to cope with the extended hours. The move was very much a success for all concerned, there were no negatives.

Relaxed drinking laws

The same could be said of the extended drinking laws when bars were granted permission to open beyond 6pm. The "swill' of the 1960s was replaced with "sensible drinking". The culture shifted to people being able to enjoy a social drink in comfort, rather than drinking as much as one could in the limited allocated time.

Again we saw an increase in employment opportunities with "food & beverage" facilities emerging as true and successful business opportunities.

The threat of VHS and DVD

We also have the example of the introduction of videos and DVDs. At the time there were those that suggested video, and later DVD, would be the death knell of the Cinema Industry.

Ironically, videos and DVDs have all but disappeared off store shelves replaced by in-home entertainment services like Netflix or Lightbox etc. Video Stores are basically out of business, but cinemas still remain. The reason is that it creates social connection. Going to a movie (and maybe a meal) is an outing that we cannot replace with isolated in-home entertainment.

So why are Amazon making statements about their ability to impact on Traditional Retailers?

It’s a scare tactic that effectively draws attention to Amazon entering the Australian Market. Retailers who fall into that trap will soon succumb. I was alarmed to read that The Warehouse were talking about this threat and blaming their sales decline on this competition to their traditional business. I commented on this a few weeks ago.

Amazon are no fools. They introduced online shopping to the worldwide market, and in an endeavour to compete retailers introduced their own online shopping opportunities.

The response to this form of shopping has been positive. To date it has not negatively impacted on either the bricks and mortar industry or the retail industry. The reason? The same we just mentioned above for cinemas; people can be "remote" if they wish, but by and large the majority of us want to retain some level of social connection.

This is the key reason retail trading or retail merchants will continue to be around far longer than Amazon’s threat suggests. Furthermore, online shopping has boosted the performance of courier and transport companies, and as a result, employment in those industries and that of storage facilitators.

There is always a pot of gold at the end of each rainbow; it’s a matter of how we want to access the pot!
 

 Paul Keane is a registered property professional and has vast experience in New Zealand’s commercial property industries. He provides retail and property consultancy including development management to many New Zealand property owners, developers and city councils. This post originally appeared on RCG's blog.

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