Consumers will be the big winners from increased competition in Australia’s retail sector according to Coles Managing Director John Durkan, who spoke at Australian law firm Lander & Rogers’ recent annual economic briefing in Melbourne.
More than 300 attendees heard Mr Durkan, alongside NAB Group Chief Economist Alan Oster; Haven; Home, Safe CEO Ken Marchingo, and Grocon CEO Carolyn Viney discuss domestic and global economies, concluding that while the Australian population is still feeling uncertain, the economy is actually in good shape.
Commenting on the possibility of Lidl opening in Australia, Mr Durkan said the Australian food retail market is different to most markets around the world in that there is a relatively large independent market.
“This makes Australia an attractive market to other players in terms of bringing small formats,” he said. “ALDI and Lidl are very successful globally: they can operate very cost-effectively, and this is a market that doesn’t have a high barrier to entry in terms of coming in and setting up a retail operation.
“Discounters are good for consumers, they bring an additional level of competition, but I think the real part of the market that gets affected by the entry of hard discounters like ALDI or Lidl, certainly in the short term, is the independent market.”
Mr Durkan also spoke about the future of the retail food industry and the importance of free trade agreements in the long term. In particular, he highlighted how fortunate Australia is to be able to produce its own “clean, healthy, good-quality food” and the opportunities this created in a climate of increasing food scarcity.
“If we can be really productive (and) efficient in our domestic market, then there is a marvellous opportunity for this country in terms of food growth into Asia,” he said.
Commenting on the outlook for the retail sector, Mr Durkan said that while food retail doesn’t experience the same highs and lows as other industry sectors, feedback from their customers indicated that Australian consumers were still feeling uncertain about the economy and, as a result, were still very price conscious. In response, Coles has focused on investing more in technology in order to understand consumer buying patterns and keep costs down.
Lander & Rogers partner, and MC for the briefing, John Wells said that Coles’ experience was indicative of the retail sector in general, noting that “we are seeing a continuing focus on servicing online customer demand”.
“Retailers are still investing significantly in the bricks and mortar customer experience, while shopping centre landlords are focusing on moving beyond the traditional shopping centre experience and broadening their entertainment and leisure offers,” he said.
Overall, the panellists were optimistic about the state of the Australian economy.
“A lot of people are talking the economy down,” Mr Durkan said. “Actually it’s in better shape than people realise (and) if you compare it to the rest of the world … it’s a marvellous place to be doing business.”
Footage from the Briefing is available at the Lander & Rogers YouTube channel.