The Australian business world is full of speculation and sometimes fear about when Amazon will open and what the effects will be.
You only have to look at what's happened in the USA and Europe to see the effect that Amazon has had on the retail world, as well as the other areas that it operates in.
However, the share prices of some of the businesses that will most likely be affected are down 20% or 30% before the first shots have even been fired. Are Harvey Norman Holdings Limited (ASX:HVN), JB Hi-Fi Limited (ASX: JBH) and Greencross Limited (ASX: GXL) really about to be wiped out?
Amazon hasn't even started selling anything in Australia yet, so it can't damage the retailers at this point in time. Even then, it will start with a 24,000-square metre fulfillment centre in the Melbourne suburb of Dandenong, not any other states.
At the moment online retail sales only amount to 7% of the total retail sales in Australia, so unless Amazon can drive a large segment of shoppers towards the internet instead then it won't be able to steal much of the retail pie to start with.
Australia is a much bigger country than most of the others that Amazon operates in, with a very different population spread which offers unique challenges. Also, Australia has much higher labour costs and higher consumer protection laws which will cost Amazon more than in the USA or Europe.
It won't be a walk in the park for Amazon by any stretch. Our Aussie retailers will fight back and can offer things like a personalised in-store service which you just can't get from an online store.
So, are the retailers a buy?
Harvey Norman and the others may have a good short-term future if they can surprise the market with positive earnings results. However, they will have to adapt to the online world if they're going to continue thriving.
I'd be much more worried about an Australian recession, or at least a cutback of retail spending, which could cause retailers problems with their earnings.
Out of all the large retailers, I think Greencross is the only one that would be a good buy at the current prices.
