Investment in technology by local retailers may be the best means of battling Amazon in Australia, according to data and analytics company GlobalData.
According to data, total retail sales in Australia are expected to grow by $60 billion between 2016 and 2021.
The online channel is outperforming bricks-and-mortar, and is expected to grow its share from the current 7% of all sales to 10% over the same period.
GlobalData digital retail analyst Andreas Olah said for Australian retailer to survive in an already challenging market, significant investment needs to be made in relevant technologies.
“Australian retailers need to invest in mobile apps that include various features from browsing and shopping to product and style advice.
"By focusing on their customer service capabilities with segment-specific knowledge, and a strong brand image with Australian identity, these local retailers have the opportunity to build deeper connections with their customers than what a global generalist like Amazon could ever achieve, even if it opened physical stores.”
Olah also highlighted that local retailers needed to realise that competing against Amazon for most standard goods on price is not viable and ensure that they provide their customers with a differentiated experience by investing in technology.
To compete with local retailers, over time Amazon may look to open physical stores such as Amazon Go checkout-free grocery stores.
The first Amazon Go store has just been opened in the US, with plans to expand these stores to major cities globally.