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Adairs to consider Amazon partnership

AdairsThe impending entry of Amazon could be an opportunity for bedding retailer Adairs to sell its fashion-focused bed linen on the e-commerce giant’s marketplace, CEO Mark Ronan believes.

The big-box player will evaluate whether to hedge its exposure to Amazon through a partnership in the coming months once the marketplace offer begins to establish itself in the market.

“We’re definitely interested in what the [marketplace] model looks like,” Ronan told Inside Retail.

“They won’t have that fashionable linen offer out there, it could be an opportunity.”

Amazon marketplace has previously been identified as a lucrative opportunity for SMEs, but the addition of Adairs to the marketplace could bring its range of high-end linen and velvet doonas, which have bolstered its in-store sales in recent months, into Amazon’s stable.

The move would limit Adairs exposure to competition from Amazon on higher volume categories such as white dye linen and towels, products Ronan said may come under pressure.

“They’re a competitor, customers will have a go and like any competitor we’ll have to adapt and change as we go,” he said.

“The biggest risk for all of us in retail is what happens to those C and D grade shopping centres and whether Amazon really knocks them around in a foot traffic sense. That will naturally lead to a toughening of the sales market in those centres.”

Adairs share price soared 34.2 per cent yesterday to $1.27 after it revealed a Q4 sales turnaround, negating much of the impact from a poor first half, which has dragged on investor confidence since February.

Ronan attributed Adairs’ sales turnaround to “good old retail execution”, and the implementation of a new range of fashionable linen.

“After three years of the business trading particularly strongly, we got a little bit lost when things went a little off the rails,” Ronan explained, referencing choppy consumer confidence.

“We weren’t as disciplined as we had been in the past, we chopped and changed our ideas as to what we thought could get us out of the hole.”

Now looking forward to its first half results in FY18, the company is looking to avoid repeating past mistakes, getting customers considering purchases over the line by expanding its buy-now-pay later offer to its network of more than 150 stores.

Ronan remains cautiously optimistic about macro conditions, noting that customers are willing to purchase, but only if the product is right.

He is keeping a close eye on moderation in the housing market, with a fall in prices predicted to impact a variety of homeware retailers in FY18.

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