Who is Amazon going to kill?

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Via UBS:

Understanding the consumer: What are Aussie consumers doing online? Online retail sales in Australia have grown at 14% CAGR over the past 5yrs, and 13% in the past year, far outpacing total retail sales growth of 3.8% & 2.9% respectively. With online penetration rising by c70bp pa, we have partnered with UBS Evidence Lab to survey 1,008 consumers in Australia (13,191 consumers in APAC; See report) to better understand what is driving this change, which categories are most impacted and what impact Amazon (AMZN) will have in Australia. We conclude online penetration in Australia will accelerate, that local retailers are well positioned to capture share, but that it will put pressure on margins and AMZN will be a key driver of this. We continue to believe market concerns about the AMZN impact, while warranted, are over-priced in local share prices, presenting a medium term opportunity.

What did we learn from 1,008 Australian consumers? 1. Online penetration to accelerate: Driven by better prices and convenience (Figure 7). UBSe penetration +115bp pa ex-food to FY23 (vs. +70bp past 12mths). 2. Aussie retailers well placed: Local websites feature prominently in online purchases (Figure 6), with international share of online spend down c700bp over the past 5 years. 3. Click & collect (C&C) an opportunity: For bricks & mortar retailers, making up just 9% of purchases. 2/3rd of consumers said they spend more when they elect to C&C. 4. Still a place for malls: ~81% of shopping decisions still involve stores, albeit space will need to consolidate in some categories, with high street retail most exposed (Link).

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.