Published on the 22/11/2017 | Written by Jonathan Cotton

Could it be that the death of Australian retail has been greatly exaggerated?…

Another day another report and this one showing a big bump in retail tech spending on the horizon.

Available from the Frost & Sullivan website, the Australian Retail Technology Report, 2016–2021 (US$3000 if you’re short of a bedtime read) projects that retail technology investment in Australia will reach an annual growth rate of 28.8 percent for the 2016 to 2021 period.

It’s little wonder. Much ink has been spilled regarding the effect Amazon is going to have on the AU retail landscape and tech spending is bound to be one. For the optimistic, the other will be a raising of the local service standards as retailers look to beat Amazon at their own game – or die trying.

Such clarity of purpose may be a little overdue. Retail tech innovation and implementation in Australia lags behind that of other developed countries with investments in the same demonstrably lower than the US.

So why are Australian retailers, generally speaking, so hesitant to break with their legacy systems?

Ask a vendor and they might imply naivety on the part of Australian retailers – or at least something of a parochial attitude to the way business is done – but it could well be that the industry is responding quite rationally to an immature market. With a population of just 23 million, Australia simply doesn’t have the local numbers to support a huge e-com infrastructure and with 69 percent of Australian digital buyers making cross-border purchases on the regular (primarily from the US, China, and the UK).

Australia is the leading cross-border spender in Asia-Pacific and while the Australian consumer may be motivated by rock-bottom import prices that doesn’t necessarily represent an urgent opportunity to local e-retailers.

Maybe Australian retailers actually understand their customers better than we think. After all wages are stagnant, household costs are increasing and price point is increasingly the only point of interest for many shoppers. Maybe that’s the reason for the reported slump in retailer confidence about growth over the coming Christmas period: The Deloitte Retail Review shows retailer confidence for 2017 Christmas sales growth down 12 percent from 2016.

“A number of retailers haven’t survived the year and there is a concern amongst respondents that weakness may continue throughout Christmas 2017,” said David White, national leader of Deloitte’s Retail, Wholesale & Distribution Group.

“With so many new and expanding competitors in the market combined with price deflation and rising electricity costs, it will be a challenge for retailers in the apparel, footwear and department store sectors to maintain margins over Christmas in the face of these headwinds. Food and grocery may find the going easier with price inflation providing a boost to margins.”

Sure, retailers are taking their time to meet the market online, but perhaps not excessively so.

Either way, Amazon’s imminent arrival (rumoured to be going live this Friday) will surely be motivation for those retailers who are genuinely dragging their feet. But while the e-commerce goliath may be getting all the headlines, Chinese e-commerce juggernaut  Alibaba plays a significant role too. It’s a platform that several Australian retailers are managing to exploit nicely.

2017’s Single’s Day – Alibaba’s annual consumption celebration/frenzy – topped US$25.3 billion worldwide this year. Australia was the third highest selling country of the day, and that position was created by the participation of a mere 63 AU companies.

If Amazon is the so-called retail killer, could Alibaba be its saviour? The company certainly comes with some big numbers attached: It’s one of the world’s most valuable companies, has 529 million monthly active mobile users and a market value of almost US$500 billion.

And for retailers here, they’re certainly making all the right noises: The company hosted an e-commerce expo for SMBs back in October, explaining the Alibaba ecosystem, providing access to service partners and buyers, and demonstrating the cross-border opportunities available to Australian retailers.

“Australian products are highly regarded in China and continue to attract the attention of millions of Chinese consumers who demand high-quality goods,” enthused Maggie Zhou, managing director of Alibaba Group, Australia and New Zealand at the time.

“To date, many Australian businesses have already taken advantage of the benefits of the Alibaba ecosystem and cross border e-commerce trade”.

So as one door gets kicked in by Amazon, another multinational giant may be opening another.

And despite reports, Australian retailers are prepared to invest in e-com tech – when the moment’s right. The Australian Retail Technology Report, 2016–2021 predicts that spending is about to take off, especially in regards to digital signage, point-of-sale systems, big data analytics (BDA), cloud computing, and AI is all set to increase.

In the meantime, Amazon is almost here. Hooray?