The full impact of Amazon’s entry into the Australian market is yet to be felt, but the global retail giant is showing no signs of slowing down.

According to Deloitte’s Global Powers of Retailing Report, an annual report which ranks the global retailers by revenue, Walmart remains the world’s largest retailer, but Amazon is catching up.

The Seattle retailer jumped two places in the rankings to become the world’s fourth largest retailer. Based on current growth rates, only Walmart will be bigger than Amazon in two years’ time.

“This is an extraordinary feat considering Amazon only entered the top 10 two years ago and remains a strong pointer for local retailers,” said David White national leader of Deloitte’s Retail, Wholesale & Distribution Group.

Deloitte’s earlier research shows Australian retailers aren’t yet feeling the pressure from Amazon, but warns retailers should expect the competition to heat up.

White explained, “The apocalyptic impact some expected Amazon to have on the Australian retail market might not have materialised just yet, but the giant’s subscription-based Prime delivery service is priced at more than half its US equivalent here, and its frictionless omnichannel delivery experience is increasingly challenging the speed of Australian retailer’s fulfilment models. We can certainly expect to see more investment and innovation on this front in 2019.”

Online retail sales will continue to grow, the report argues, but are still lower than many other developed retail markets.

“Local retailers are starting to reap the rewards from earlier digital investments, and we can expect digital sales to be increasingly important to local performance,” White said.  

“That said, the role of the physical store will remain critical, with digital integration and the creation of a meaningful customer experiences using innovative store formats, new in-store technologies and personalised customer service key to a successful strategy.”

Source: Deloitte Global Powers of Retailing Report 2019

Three Australian retailers – Wesfarmers, Woolworths and JB HiFi – have held their positions on Deloitte’s top 250 retailers list. Between them, they generated revenues of US$96.95 billion.

Wesfarmers and Woolworths maintained their top 25 placings, at 21 and 22 (Wesfarmers unchanged, Woolworths up one place). While JB HiFi’s ranking has moved up from 218 to 181, thanks to the full year revenue contribution of the Good Guys acquisition.

39 of the Top 250 now operate in Australia, this includes includes Chinese ecommerce companies like and Vipshop.

“Despite Chinese businesses only commanding 5 per cent of the Top 250 retailers operating in Australia, we expect this will increase over coming years, particularly with the rise of omnichannel marketplaces throughout Asia,” White said.

Major internationals like JD Sports and H&M continued to expand locally, high profile exits from the Australian market included Gap, Toys “R” Us and Forever 21.

Source: Deloitte Global Powers of Retailing Report 2019

The outlook

It was a healthy year for the world’s largest retailers, which generated US$4.53 trillion in revenues in FY18, up 5.7 per cent year-on-year. However 2019 is tipped to be a challenging year for Australian retailers, extending the slowdown which hit in the second half of 2018.

“Australia’s retail environment was a tale of two halves during 2018. Performance was strong earlier in the year as cheap credit and rising asset prices fuelled confidence to spend, however by year’s end we saw significant declines in household wealth through both falling house prices and share market declines,” White said.  

“This weighed on the retail sector. Sales slowed through the year to produce a lean Christmas, and purchases of consumer durables starting to top out.”

Retail sales early in 2019 may be challenging, the report notes, with consumer putting saving ahead of spending.

“Retailers’ heavy reliance on imports has many watching the value of the Australian dollar closely. Any major decline in the currency could result in significant cost pressures at a time when there is little room to increase consumer prices,” White said.

“Consumer spending for the year ahead will be largely driven by wage growth as consumer wealth declines and the willingness to forgo savings for spending diminishes.”

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