Australian retailers are set to come under attack from struggling US retailers who are looking for business growth outside of the US.
Last week the giant US stationary chain Staples who also sell PC and IT products launched an Australian web site, they are set to be followed by Amazon and Best Buys in 2011 according to US retail specialists.
The US-based Staples, the world’s biggest office supply chain has targeted the Wesfarmers owned chain Officeworks.
Both Amazon and Best Buy are set to target JB Hi Fi and Harvey Norman as well as a host of smaller chains that sell consumer electronics products.
Staples signalled its entrance to the Down Under market in July when it paid $396 million to acquire Corporate Express.
Its new Web site, staples.com.au, will initially target NSW and the ACT, but will go national in 2011, according to local boss Richard Haigh. The office supplies market in Australia has been estimated to be worth $7.4 billion a year.
According to observers the Australian market is an easy one to target for big US retailers due to the high cost of many goods which are imported into Australia by distributors. This they claim adds an additional layer of margin. Also contributing to the high cost of goods is the margin demands that retailers like Harvey Norman make on vendors which include up to 25% margin plus a margin for hitting target. They also demand “significant” marketing dollars in the form of Co-Op funding for catalogue advertising.
According to Citi Group Analyst Craig Woolford the move “will rattle” Australian retailers especially those that have a limited online presence.
“If they are going to undercut Australian pricing it could have an impact. Amazon is already here and it does not surprise me that other operators are moving into this market” he said.
A comparison by ChannelNews shows that Staples are selling a HP Pavillion notebook for $US649.98 or with rebate $599. In Australia Officeworks are selling the same notebook for $1018.10.