Further international competition is set to disrupt the Australian market in 2018, research from Deloitte has revealed.
With only 15% of the top 250 retailers globally operating in the Australian market, analysis indicates local retailers can expect further competition to come from international players.
Deloitte retail executive David White said China will be a major region to watch.
Last year, Alibaba opened its Australian headquarters in Melbourne, Vipshop Holdings opened a distribution centre in Sydney and JD.com is expected to follow suit.
“These fast-growing Chinese retailers and e-commerce platform providers are starting to make a significant impact on the global retail market. This provides Australian retailers with a huge opportunity to take advantage of high Chinese demand for Australian products," White said.
There are now 38 of the top 250 global retailers operating in Australia – one lower than last year, according to the latest Deloitte Global Powers of Retailing Top 250 report.
While there are two new additions in UK department store Marks and Spencer (operating through an eCommerce platform) and JB Hi-Fi, this increase is offset by Debenhams and Abercrombie & Fitch falling out of the Top 250.
White said 2017 saw the retail market growing overall, but at the same time, the level of competition amongst retailers also continued to increase.
“Ongoing population growth, a strong tourism market and improving wages are all set to ensure the overall retail market continues to grow in 2018.
"However, with the increase in competition from both international and domestic retailers, we can expect to see further consolidation in the sector.”
White also highlighted that several new players outside of the top 250 have entered Australia in the last 12 months, a trend that looks set to continue in 2018.
“JD Sports, the UK sports-fashion retailer, now has five stores in Australia. Also, well-established international players in the luxury retail market, such as Swarovski and Tiffany & Co, have opened new stores, expanded existing footprints and introduced new brands to our market.
"We also saw the French-owned retailer Décathlon open its first bricks-and-mortar store in Australia in 2017 and Amazon’s long-anticipated arrival to our shores."
Despite the global retail environment remaining in a relatively stable state, the Australian market continues to face a number of potential disruptors, with Amazon remaining at the top of the list.
While the online retailer’s initial launch of its on-shore business didn’t have the disastrous effect many analysts forecasted, White said it will continue to be a major factor in the year ahead.
“As Amazon builds out its infrastructure and services in Australia in 2018, we can expect its presence and influence on the market to grow significantly, particularly in the second half of the year and in the lead up to Christmas.
"We’ll have to wait and see the ultimate impact of Amazon’s on-shore business in Australia, but it’s important to remember this also creates opportunities for Australian retailers.
“And with so much change and uncertainty in the Australian retail landscape, 2018 could be a pivotal year for many Australian retailers."