Amazon will impact retail rents as it heads into apparel

Amazon's expansion in Australia will accelerate growth in the online retail market and this will result in reduced growth in turnover of some shopping centres, according to new research.

Researchers at m3property said the impact on retail property will vary centre by centre and will depend on the centre's tenant mix, location and management.

It has been said that Amazon could "officially" arrive and start operations in Australia by November 24 to coincide with the "Black Friday" online spending weekend.

In Australia, the group has signed a lease in Dandenong South, Melbourne and is said to be looking at a Goodman Group site at Eastern Creek.

Goodman chief executive, Greg Goodman, has consistently declined to comment on any Amazon move to Australia.

However, Mr Goodman said Amazon is to open an 18,000-square-metre distribution centre in the Port of Hamburg, owned by Goodman. It indicates the expansion of Amazon's distribution centres near key transport hubs.

"The effect of Amazon's expansion on Australian retailers and retail property is expected to be similar to how it has played out in Canada," m3property's research says.

"Like Canada, the low population density of Australia will be a moderate barrier to entry and may see Amazon choose to introduce a restricted offering initially, such as an east coast only offering, or the delayed rollout of its Prime membership."

The research suggests that what is likely to occur following Amazon's expansion into Australia is an acceleration in total online sales growth. This will result in reduced turnover for some retailers.

"This is likely to be combined with reduced demand for space from rationalising retailers, which results in reduced competition for space, and therefore market rents may decrease. Centres are also likely to see cost increases in terms of attracting customers and maintaining tenants, as well as reduced revenue from the increased churn of tenants," the research says.

But while most analysts have pinpointed that electrical and appliances will be hit, apparel could be under fire.

According to Bloomberg,'s expansion into private-label active wear is beginning to show up on its website, a move that will generate fresh competition for Nike and Lululemon Athletica.

Amazon is now selling at least two new product lines - Rebel Canyon and Peak Velocity - that appear to be internal brands, according to analysis by business intelligence firm L2.

The e-commerce giant is adding the apparel as part of an effort to fill gaps in its line-up rather than counting on big sports brands to offer their merchandise on Amazon, according to L2 analyst Cooper Smith.

"Amazon isn't going to wait for brands to sell on its site, they're going to make their own private label," Smith, who handles Amazon research at L2, said in an interview. The names were trademarked by the office of James Struthers, an intellectual property lawyer who has been associated with earlier Amazon applications, Smith said.

Amazon, based in Seattle, didn't immediately respond to a request for comment from Bloomberg.

Rebel Canyon features men's sweatpants, sweatshirts and shorts - often priced below $US30. The line-up is described on Amazon as "a way of life" and "style you'll wear on the reg". The brand also includes some women's lounge clothing.

Bloomberg reported last month that Amazon was making the foray into private-label sportswear. The company has been working with major Taiwanese suppliers, Makalot Industrial and Eclat Textile - to produce the clothing as part of a trial, people familiar with the situation have said.

Eclat makes clothing for Nike, Lululemon and Under Armour, suggesting that Amazon's new high-performance sportswear may become a direct competitor to apparel from those brands.

with Bloomberg

This story Amazon will impact retail rents as it heads into apparel first appeared on The Sydney Morning Herald.