Australian Supermarkets Face Growing Competition from Amazon
Australian supermarket giants Woolworths and Coles have expressed concerns about the growing competition from Amazon at the Australian Competition and Consumer Commission (ACCC) supermarkets inquiry.
Both companies identified Amazon as a strong emerging competitor, despite its current lack of fresh produce offerings. Woolworths CEO Amanda Bardwell highlighted the company's significant investments in online offerings to compete with Amazon, while Coles CEO Leah Weckert expressed concerns about Amazon's potential to disrupt their business model.
An IBISWorld report identified Woolworths as the leading player in online shopping in Australia, followed by Coles and Amazon. Online shopping accounted for about 15% of Woolworths' sales and was the fastest-growing part of its business.
Coles believes regular customers are already shopping for non-perishable items like dishwashing products and nappies online. Amazon launched its Australian retail store in 2017 and is investing heavily in its Australian operations.
Professor Gary Mortimer from QUT business school believes Amazon's reach in Australia is still behind the rest of the world, but it is growing. He noted that Australian shoppers are actively looking for ways to access cheaper food and groceries.
Amazon stated that online retailers are making a difference for Australians trying to manage household budgets. They also emphasized their focus on delivering value for Australian customers and empowering Australian small businesses to sell in their stores.
The ACCC's interim report noted that Coles, Woolworths, and the Australian Retailers Association were the only ones to raise Amazon as a potentially significant competitor in their submissions. The report also highlighted that most Australian consumers currently prefer to do most of their grocery shopping in-store.
Mildura shopper Selwyn Patterson prefers to shop for food in-store but acknowledged that price and convenience could make him consider shopping online.
Dr Craig Emerson's review of Australia's Food and Grocery Code of Conduct in June concluded that Amazon does not appear to be operating a "supermarket business" at the moment, because it does not supply fresh produce.
The ACCC wrote in its interim report that it did not consider non-supermarket businesses retailing groceries to be "significant competitors to supermarkets" although some consumers might consider them alternatives at times.