Recently, I have been examining what I call ‘The Invisible Enemy’ facing Australian and global retailers. This pervasive, almost intangible force is dismantling the traditional pillars of retail with alarming speed.
Once, we knew our competitors. They were visible in malls, high streets, shopping centres, or online marketplaces. But today, the competitive landscape has dramatically shifted, and traditional retailers find themselves grappling with an enemy they can no longer see or predict.
Over 1.5 million parcels now arrive daily into Australia, driven largely by e-commerce giants Amazon, Temu and Shein. Collectively, these companies have amassed around $9 billion in sales in Australia in just the past year, with growth projections climbing.
These tech-forward companies are not merely competing, they’re creating an entirely new model, seemingly leaving traditional retailers unable to keep pace or even comprehend their competition’s full scale.
Let’s look closer at how these companies, currently trading at 30 per cent plus growth rates, are reshaping the retail landscape:
American-based global giant Amazon has solidified itself as one of the most formidable players in Australian retail, capturing a loyal customer base with its extensive selection, reliable delivery, and customer-centric focus.
Over the last three years, Amazon has doubled its customer base in Australia, with 3.4 million Australians now shopping on the platform every month. Amazon’s $6 billion in annual sales in Australia accounts for nearly 10 per cent of all online retail spending in non-food categories, placing it among the top five non-food retailers in the country.
Amazon’s steady and strategic expansion of its logistics network has given it an edge in speed and efficiency. Additionally, Amazon’s Prime membership offers customers value-added services, such as exclusive deals and fast, free delivery options, which traditional retailers struggle to match.
This seamless, integrated customer experience has redefined Australian consumers’ expectations, making it harder for traditional retailers to compete with their slower and more costly fulfilment methods.
A relative newcomer to the Australian market, Temu – whose parent is China’s PDD Holdings – has quickly attracted a large following.
In the last year alone, 3.8 million Australians made purchases on Temu, and the number of monthly shoppers has grown by 32 per cent over just two quarters. With annual sales in Australia estimated at$1.7 billion, Temu’s growth has been meteoric, largely fuelled by its competitive pricing and frequent promotional events.
Unlike traditional retailers, Temu’s strength lies in its data-driven approach and sophisticated AI algorithms, which help the company understand consumer preferences and optimise its offerings accordingly.
With 80 per cent of Temu shoppers repeat customers and nearly half of them making purchases four or more times a year, it’s clear that Temu has found a winning formula for customer loyalty – something that even established brands often struggle to achieve.
Shein has become a major player in Australian fashion, particularly among younger consumers. Over 2 million Australians bought from Singapore-based Shein at least once in the past year, and its monthly shopper count rose by 34 per cent within two quarters.
With an estimated$1.1 billion in annual sales in Australia, Shein has carved out a niche in the fashion market by offering trendy styles at affordable prices. Moreover, Shein’s 76 per cent repeat customer rate demonstrates a level of brand loyalty that is rare in fast fashion.
Shein’s success is rooted in its agile supply chain, which enables the company to adapt to the latest trends quickly and bring new products to market in record time. Unlike traditional retailers, which often operate on seasonal cycles, Shein updates its inventory continuously, keeping customers engaged and coming back for more. This quick-turnover approach has disrupted the fashion industry and created a standard for immediacy that traditional retailers find difficult to replicate.
The rapid rise of Temu and Shein has caught many retailers off guard. Their growth, largely unforeseen just a year ago, highlights the challenges that traditional retailers face in a digital-first world. These companies have quickly established strong customer bases by leveraging advanced technology, data analytics, and AI to understand and respond to consumer behaviour in real-time.
The real danger for traditional retailers lies not just in the success of these new entrants but in the shift in consumer behaviours and expectations they have brought about.
Today’s consumers expect a seamless shopping experience, fast delivery, and competitive pricing. They’re also increasingly comfortable making multiple purchases from international e-commerce platforms each month, with every Australian statistically receiving three to four parcels a week. This shift in buying patterns has left many traditional retailers scrambling to adapt to a retail environment they scarcely recognise.
A defining feature of these tech-forward companies is that they’re fundamentally different from traditional retailers in their objectives and operations. These businesses operate as tech/AI platforms where the product itself is almost incidental to the larger goals of data acquisition and customer engagement. For Amazon, Temu and Shein, data is their most valuable asset, allowing them to tailor their offerings, streamline logistics, and optimise customer interactions in ways that traditional retailers cannot.
This approach isn’t focused on maximising profit in the short term but on capturing market share, accumulating consumer data, and building long-term loyalty. For traditional retailers, competing with companies that prioritise growth and data over immediate profitability can be incredibly challenging, as it requires a shift in mindset, strategy and operations.
In this rapidly changing landscape, Australian retailers must double down on strategy and differentiation. The traditional retail model, with its seasonal cycles and in-store focus, is quickly becoming outdated. Retail boards and CEOs must recognise that the current market is at a tipping point, and adapting to the new norms will be crucial for survival. Those who fail to evolve risk being left behind, as consumer expectations continue to align more closely with the fast, efficient and personalised experiences companies like Amazon, Temu, and Shein offer.
To compete with these tech-driven giants, traditional retailers need to reimagine their value proposition. This might involve enhancing the in-store experience, investing in omnichannel capabilities, or adopting sustainable practices that resonate with eco-conscious consumers. By focusing on their unique strengths and differentiating themselves from the competition, traditional retailers can find a path forward in a world where digital-first players dominate.
The invisible enemy facing Australian retailers is not just Amazon, Temu or Shein – it’s the paradigm shift in consumer expectations and shopping behaviours that these companies have brought about. In this new retail landscape, speed, convenience and personalisation are paramount, and traditional retailers must adapt to meet these demands or risk becoming obsolete.
The retail revolution is here, and the window for adaptation is closing. While some traditional retailers may struggle to keep pace, those that embrace change and leverage their unique advantages will find opportunities to thrive. The future of retail will be shaped by those who can see and respond to the invisible enemy, evolving with the times to deliver value in ways that resonate with the modern consumer.
The post How Amazon, Temu, and Shein are reshaping Australia’s retail landscape appeared first on Inside Retail Australia.
