Amazon weighing on Kiwi retailers

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Was there ever a company whose arrival was more feared, more anticipated then Amazon?

The announcement the retail giant intends to set up in Australia is generating a huge amount of discussion, according to Retail NZ general manager for public affairs Greg Harford. “Amazon is the top conversation topic among New Zealand retailers,” he says.

Retail NZ, which counts around two-thirds of New Zealand retailers in its membership and on whose board sit representatives from Warehouse Stationery and Foodstuffs, has been lobbying for overseas companies to pay the same tax as domestic retailers. In its pre-election manifesto, Retail NZ anticipates that – based on current spending trends – New Zealanders in 2018 will buy more goods from international e-tailers than local retailers1 .

Harford says domestic retailers are at a disadvantage, adding 15% GST onto every purchase, and sometimes an additional 10% for duty. In New Zealand, GST doesn’t apply to overseas companies until the price for a product is over $400. Across the Tasman, the price threshold is higher, but the situation changes on 1 July 2018 when all foreign companies selling goods in Australia will be required to register for GST.

Regulation aside, what are some of the innovative approaches retailers can take to ensure their customers don’t migrate to Amazon when its fulfilment centre is just across the Tasman and the wait time for goods will be much shorter?

Harford says retailers can make shopping more convenient, for example with “click and collect” schemes that enable customers to order online and know that the item they require is in store. Price should also be a focus, because “Kiwis love a bargain” – and that means retailers have to drive out cost. Also, after-sales care is a big factor in ensuring customers’ loyalty.

As for collecting and using data, Harford says clothing retailers are particularly good at this, because customers spend longer in store and there are more opportunities to join them up to loyalty programmes, and in doing so input their data into their systems.

Another tactic is to offer shoppers an experience. Harford notes that while spending on retail has remained flat, hospitality has increased. While bookstores have long understood the power of integrating a café into the store, large retailers like Mitre 10 and Bunnings are now offering a similar service.

In short – sharp pricing, customer data, after-sales service and an enjoyable experience. “Easy to say, hard to do,” says Harford.

1 According to Retail NZ, New Zealanders buy 98% of international goods from just 3.5% of the world’s retailers.

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