Lot's of discussion now on this topic, core to sentiment shift for retailers over last few months and important to the shift in other direction. Comments below from CEO at SRG as published in AFR provide interesting insights into existing retailers in general in tackling this issue.
"Our analysis concludes that the market disruption will not be as detrimental to SRG as implied by some market commentary and the recent share price fall," he said.
SRG shares have fallen more than 30 per cent since March, undermined by slowing same-store sales growth and a series of broker reports on the impact of Amazon and
global sporting goods retailer Decathlon on SRG's Rebel, Amart Sports, Super Cheap Auto, Rays and BCF chains.
Analysts have estimated that SRG's earnings could fall at least 19 per cent and as much as 32 per cent if Amazon grabs at least 5 per cent of sales in the auto, sporting goods and leisure categories.
Mr Birtles said broker estimates were overstated, citing analysis by Hitwise which suggested that Amazon was likely to garner only 2 to 3 per cent of the combined auto, leisure and sports markets, picking up sales of $200 million to $300 million.
However, he said historic levers such as range differentiation and competitive prices would no longer be sufficient to protect retailers such as SRG from new global competitors.
Mr Birtles said about 55 of SRG's top 100 auto products were not available on Amazon, while 18 SRG products were cheaper than Amazon and 27 were more expensive (after adjusting for indirect taxes).
In leisure, about 44 of the top 100 lines were not sold on Amazon, 28 products were cheaper and 28 cost more.
In sporting goods, 22 of the top 100 lines were not sold on Amazon, 36 were cheaper than Amazon and 42 were more expensive (about 3 per cent excluding fitness equipment).
SRG did not compare prices with vertically integrated sporting goods retailer
Decathlon, which has opened a dedicated Australian web store and plans to open its first bricks and mortar store in October. Decathlon's products, all of which are designed in-house, are 50 to 70 per cent cheaper than branded products, according to a Citigroup price survey.
Super Retail Group is now in discussions with suppliers whose prices on Amazon are significantly below SRG's prices.
Mr Birtles said SRG needed to build stronger emotional connections with its customers based on their passions and leisure activities and develop world class, rather than Australian-class, organisational capabilities including a seamless omni-channel experience, better customer insights using customer analytics and loyalty club data, and store refurbishments.
SRG's customers wanted more than range, price and convenience, he said, and were seeking to be part of a community, expertise, inspiration, innovation and solutions such as fitment services for auto accessories and staff knowledge about the best local fishing spots.
"Our focus is on helping our customer catch the fish they've always wanted to ... not just sell them the fishing rod," said Mr Birtles.
SRG also plans to launch new private label sporting goods in 2018 with the aim of lifting sales of higher-margin private label brands from 6 per cent to 20 per cent. Private label sales will rise from 43 per cent to 50 per cent at Super Cheap Auto and from 30 per cent to 40 per cent at BCF.
Bain & Co partner Yngve Andresen, who is advising several Australian companies on their Amazon defence strategies, says private label brands can help retailers differentiate from Amazon and other competitors and achieve competitive price points.
In a recent report, Bain & Co said Amazon threatened to create the biggest retail disruption in a generation. However, retailers could minimise its impact by offering customers what Amazon cannot, including instore experiences and services.
SRG shares rose 2.5 per cent on Wednesday to $7.67, compared with a 2017 high of $10.86 in March.
Read more:
http://www.copyright link/business/...o-peter-birtles-20170614-gwqqzg#ixzz4jwg2G8L5
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