inesses are doing to prepare. Sentiment ranged from now-former Wesfarmers chairman Richard Goyder’s dramatic assertion that Amazon would “eat our breakfast lunch and dinner,” to Harvey Norman chairman Gerry Harvey’s insistence that the e-commerce giant was nothing to fear. Others, including Kogan.com boss Ruslan Kogan and Catch Group chief Nati Harpaz, struck a more positive tone, predicting that Amazon’s entry will grow the Australian e-commerce market to the benefit of everyone. The launch itself appears to have underwhelmed the sector, but it’s doubtful that it’s convinced even sceptics like Harvey that the latest local entrant is not a significant competitive threat. With services like Fulfilment by Amazon, Prime and Alexa yet to launch locally, there’s lots of room for Amazon to develop its offer, a looming reality that will be watched closely in 2018. A bumper year… for administrators Towards the end of 2016, retail commentators were speculating whether 2017 would be characterised by retail failure following the collapse of Pumpkin Patch and Payless Shoes. They were right. Marcs, David Lawrence, Herringbone, Rhodes & Beckett, Howards Storage World, Topshop/Topman, Surfstitch and Oroton Group were just the high-profile names to have appointed administrators in 2017. The backdrop is stark – Australian Bureau of Statistics data released last week pins retail turnover growth at 1.8 per cent year-on-year as of October. That’s 73 per cent below the pre-GFC 10-year average of 6.8 per cent. It gets worse when looking at specific categories, particularly specialty fashion and apparel, accessories and footwear more broadly. Those retailers that have survived, such as Specialty Fashion Group, Billabong International, Myer and Premier Investments’ fashion stable, are now looking to close stores in an effort to lean up operations to reflect subdued conditions. There have been some happy endings. Pumpkin Patch was bought by Catch Group and relaunched as a pureplay business last week, while Marcs and David Lawrence were purchased by Myer, Rhodes & Beckett by former brand director Michel Boutin (backed by —), and Topshop/Topman by UK-parent Arcadia Group. But retail commentators are once again predicting more collapses moving into 2018. Retail Doctor Brian Walker reckons the new year will bring new opportunities for some, but others won’t be able to keep pace. “Regrettably it’s a changing of the tides. When we look at retail over the years, we’ve seen a very classic distribution model predicated on the growth of community shopping centres, but consumers now have this whole different way of doing business and the investment cost and staying relevant will be too great for some,” he says. David White, Deloitte’s Australian retail lead, agrees, noting that there’s probably some businesses holding out for Christmas trading currently. “There will be failures, that’s inevitable, but companies will be looking at how they can avoid that,” he says. “There will be more restructuring in multi-brand retailers – a refocus on the strongest most profitable part of businesses.” 3. Woolworths – a year of resurgence While 2017 was marred with retail collapses there were also some positive surprises. Not least of all was the widely admitted faster-than-expected turnaround of Woolworths Group to the forefront of the highly competitive food and grocery sector. Late last year, group chief Brad Banducci was still steering the business out of its divestment from failed home improvement chain Masters, but only 12 months later, he’s being praised by shareholders and analysts alike for putting the business in its strongest position in years. After divesting from Masters, Banducci used the cash to put around $1 billion into prices and service at Woolworths Supermarkets catching its rival Coles off-guard. Woolies’ Australian food sales increased by 4.7 per cent in the first quarter of FY18, more than double that of Coles’ 1.5 per cent increase in food and liquor sales over the same period. That’s after food sales increased by 4.5 per cent over FY17 – with 7.2 per cent growth in the fourth quarter, rounding out a consensus among analysts that the fresh food people are well and truly back to the competitive fore. FY17 profit came in at $1.53 billion – a stark turnaround from the write-down heavy $1.23 billion loss of FY16. Banducci is adamant that FY18 will be more about continuous improvement than transformation for the majority of the group’s businesses, but a question mark still hangs over its discount department store Big W. Big W recorded an earnings loss of $150.5 million and a 5.8 per cent fall in sales across FY17, leading Woolies to signal a “multi-year journey” to turn the business around by investing in prices and cleaning up its range. The new strategy, which includes all new product categories, store refurbishments and new staff training, has seemingly begun to work, with sales up 2.1 per cent in the first quarter of FY18 – although it’s still early days. 4. Things get messy between Lew and Myer 2017 AGM season was headlined by a three-month (and as yet unresolved) battle between Myer and ragtrader veteran/Premier Investments chairman Solomon Lew. It all started in March when Lew used Premier Investments to purchase a 10.8 per cent stake in the struggling department store business, remaining quiet for several months amid media speculation about a possible takeover. Fast forward to earnings season in September and it became clear that Lew had bought the stake, expecting CEO Richard Umber’s New Myer strategy to start bearing fruit after he talked up the business at the start of the year. But he was less than impressed, because after a trading update in July that downgraded its profit forecast amid tough trading conditions, sending its share price – and the value of Lew’s investment – plummeting. Down more than $30 million on his initial bet on the company, Lew embarked on a war of words with Myer’s board, declaring that leadership lacked retail experience and that aspects of the strategy, including the introduction of clearance flaws, were misguided. He then sought to use his position as Myer’s largest shareholder to disrupt its AGM, campaigning against the election of incoming chairman Gary Hounsell as well as other Myer nominees to the board. He was unsuccessful, despite managing to rally enough support to lodge a first strike against Myer’s remuneration report, and is now expected to call an extraordinary general meeting in the coming months to give shareholders an opportunity to vote on his own nominees for the board – of which there are three. Myer’s position has thus far been that the appointment of Lew’s representatives to the board would represent a conflict of interest, given that Premier does business with Myer as a supplier and Lew himself owns private companies that supply the department store. But Lew reckons that’s rubbish, contesting that Premier (not his private companies) only does around $6 million in business with Myer, and that his nominees are qualified to help Myer turnaround the business. 5. Amazon not the only new arrival While the entry of Amazon garnered significant attention from the sector, it was far from the only international retailer to cast its eye on Australia this year. There was scarcely a retail vertical untouched by the challenge of international competition, whether it was UK department store Debenhams, value players TK MAXX and Miniso, French sporting goods retailer Decathlon or hypermarket giant Kaufland. Together, these players are bringing new and disruptive interpretations on modern retail to Australia, crimping margins in the process. It also comes as more established international businesses such as H&M, Uniqlo and Aldi look to increase the size of the footprints Down Under, with the former two beginning to look beyond hyper-urban areas to more suburban and outer-city centres. White is adamant that international interest in Australia will only amplify in 2018 and that there’s still a way to go before the traditionally insulated local retail landscape is levelled. Walker believes specialty retailers in the “middle-ground” of the market are most at risk in the coming year, but also singled out grocery as a point of competitive intensity. “Businesses with high brand utility, for example in premium fashion, will be strong – and right at the other end of the spectrum in the supermarket space, entrants like Aldi and Kaufland will continue to grow,” Walker says. Whatever the case, if 2017 is anything to go by, the new year will hold just as many challenges as opportunities for retailers, both incumbent and otherwise.