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Australian retailers are "unfazed" by the disruptive potential of Amazon.

This is according to a new report by Commonwealth Bank.

The report shows 30% of Australian retailers are unaware that Amazon plans to enter the Australian market.

Of those that are aware, only 14% have a plan in place to effectively compete.

Almost half (49%) of retailers are unfazed by Amazon’s entry, and 11% see it as an opportunity for their business.

Equally, only 11% of Australian retailers see Amazon as a significant threat.

The findings have been revealed in the latest Commonwealth Bank Retail Insights Report.

Commonwealth Bank national retail manager Jerry Macey said retailers need to be better prepared.

“The reality is most retailers can’t effectively compete with Amazon on factors like delivery times and pricing, particularly when Amazon can sustain losses in the short term.

"Retailers can, however, focus on enhancing specific competitive strengths, and adapting to changing market conditions is a key part of innovating to ensure your business remains relevant to customers."

Macey said there needs to be a stronger focus on innovation.

“The potential for innovation to deliver revenue and productivity gains is evident.

"But innovation can be equally as important to maintain market share given the imminent arrival of Amazon and ongoing local expansion of other major international retailers.

“Many Australian retailers remain unprepared for Amazon’s arrival, or may be understating the potential impact that Amazon’s presence will have in Australia.

"This is somewhat concerning when you consider the impact Amazon has had on the US and other very mature retail markets.”

The report tested the rate of innovation among Australian businesses using a leading international standard for innovation used by the OECD.

It found 49% of retailers are ‘innovation active’, exceeding the national average of 44% across all businesses.

However, the estimated value they are generating from their innovations is less than half that of all other business sectors.

The research found retailers overwhelmingly (74%) cited revenue growth as the primary expected output of their innovation activity.

This is well ahead of the 47% expecting enhancements to service and customer experience.

“Retailers are already more likely to innovate than the average Australian business but our research shows their estimated average return from innovation is less than half the national average," Macey said.

"This reduced pay-off could be due to intense competition, which may increase even more with the expected arrival of Amazon retail here.

“The research found retailers could benefit from investing in the innovation capabilities of their people, and turn innovation into a repeatable process, by empowering staff to constantly trial a small number of creative ideas.

"When you create a disciplined process that unleashes the creative potential of staff to innovate across multiple areas, you achieve a higher return on investment.”

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