Woolworths and Coles Invest Millions to Compete with Amazon in Australia's Retail Market
Source: DairyNews.today
Australia’s two largest supermarket chains, Woolworths and Coles, have raised concerns over the growing competition from Amazon, as the global e-commerce giant increasingly encroaches on their market share. Both supermarkets have identified Amazon as a significant emerging rival, even though the online retailer does not yet offer fresh produce, such as fruits, vegetables, or meats.
Woolworths CEO Amanda Bardwell confirmed the company is investing hundreds of millions of dollars into enhancing its online services, which now account for about 40% of its total sales coverage. "We expect this segment to continue to grow substantially," Bardwell told a recent Australian Competition and Consumer Commission (ACCC) inquiry. Woolworths, which holds the largest market share of online grocery sales in Australia, is investing heavily to maintain its position as a leader in this space.
Coles CEO Leah Weckert also acknowledged the competitive threat posed by Amazon, particularly its potential to disrupt traditional business models with its two-hour delivery times from robotic distribution centers in Melbourne and Sydney. Coles is responding by investing in automation, with the recent construction of two automated distribution centers to boost its online capacity.
The rise of Amazon in Australia has been swift since it launched its local retail store in 2017. The company now operates six fulfilment centers and 12 logistics sites across the country, with plans to invest $1.6 billion in additional operational sites by 2026. Amazon's market share in Australia's grocery sector is still relatively small, but it is growing rapidly, particularly in non-perishable items such as cereals, detergents, and household goods, according to QUT business school professor Gary Mortimer.
An IBISWorld report highlights Woolworths as the largest player in Australia’s online grocery market, with over 11% market share, while Amazon holds around 3.4%. Woolworths’ online segment is growing the fastest, accounting for 15% of its sales.
Despite Amazon's expansion, consumers in Australia still largely prefer in-store grocery shopping. According to an ACCC survey, 78% of respondents said they never buy groceries from Amazon, though 5% regularly do. Nonetheless, online shopping is on the rise, driven by price-conscious consumers looking to maximize savings across multiple retailers, including Amazon.
While Amazon’s ability to provide fresh food remains a significant barrier, the retailer has demonstrated a propensity to partner with others to offer complementary services. This model could eventually challenge the dominance of Australian supermarkets, particularly if Amazon expands into perishable goods.
The competition is intensifying, and with Amazon's continued investment in its Australian infrastructure, both Woolworths and Coles are likely to face increasing pressure to adapt their business models in the coming years.
Coles CEO Leah Weckert also acknowledged the competitive threat posed by Amazon, particularly its potential to disrupt traditional business models with its two-hour delivery times from robotic distribution centers in Melbourne and Sydney. Coles is responding by investing in automation, with the recent construction of two automated distribution centers to boost its online capacity.
The rise of Amazon in Australia has been swift since it launched its local retail store in 2017. The company now operates six fulfilment centers and 12 logistics sites across the country, with plans to invest $1.6 billion in additional operational sites by 2026. Amazon's market share in Australia's grocery sector is still relatively small, but it is growing rapidly, particularly in non-perishable items such as cereals, detergents, and household goods, according to QUT business school professor Gary Mortimer.
An IBISWorld report highlights Woolworths as the largest player in Australia’s online grocery market, with over 11% market share, while Amazon holds around 3.4%. Woolworths’ online segment is growing the fastest, accounting for 15% of its sales.
Despite Amazon's expansion, consumers in Australia still largely prefer in-store grocery shopping. According to an ACCC survey, 78% of respondents said they never buy groceries from Amazon, though 5% regularly do. Nonetheless, online shopping is on the rise, driven by price-conscious consumers looking to maximize savings across multiple retailers, including Amazon.
While Amazon’s ability to provide fresh food remains a significant barrier, the retailer has demonstrated a propensity to partner with others to offer complementary services. This model could eventually challenge the dominance of Australian supermarkets, particularly if Amazon expands into perishable goods.
The competition is intensifying, and with Amazon's continued investment in its Australian infrastructure, both Woolworths and Coles are likely to face increasing pressure to adapt their business models in the coming years.
