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‘There’s a real role for physical retail’ irrespective of Amazon, says Vicinity chairman

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Physical retail stores in Australia had a “good future” regardless of the arrival of Amazon, according to the chairman of the retail property group Vicinity Centres, Peter Hay.

It was “perfectly possible” for people to do all of their shopping on the Internet today, Mr Hay said, and yet good Australian shopping centres were doing really well.

Peter Hay, the chairman of Vicinity Centres. Peter Hay, the chairman of Vicinity Centres. Photo: Wayne Taylor

“One of the great surprises to me over the last 20 years is how slow the take-up of Internet purchasing has been, it’s an amazingly low percentage of all sales, given that my children started buying on the Internet 20 years ago. And I thought ‘Oh well, the shops are dead you know’. But that hasn’t happened and I now believe that it won’t.

“There’s a real role for physical retail, which shall continue to be pretty vibrant,” he said.

Mr Hay’s comments came a day after Amazon’s Australian country manager, Rocco Braeuniger,  told a suppliers’ summit in Sydney that Amazon’s starting date in Australia was “getting really, really, really close”.

Mr Braeuniger said Amazon would be hosting third-party retailers on its online marketplace, and would also be selling products itself out of its first Australian warehouse, a 24,000-square-metre warehouse in Dandenong South, in Melbourne’s outer south-east.

Australian analysts predict that Amazon will start taking orders here before Christmas.

Asked what kind of impact Amazon would have on Australian retailers, Mr Hay said: “My view is that Amazon will have an impact, and we don’t know what that impact is going to be yet. In some jurisdictions there’s been a fairly slow acceleration of take-up of Amazon, and like platform providers.”

Mr Hay said the current “American experience” for retailers was that “the weaker centres are a bit more troubled, that may happen here. But I actually think that our portfolio is looking pretty strong”.

He also described Australian retailers as being as vibrant as any in the world. “The retail offering in Australia is astonishingly good really. If you go overseas shopping you work out pretty soon that everything you can buy overseas you can buy here,” he said.

On the current retail trading environment, Mr Hay acknowledged that weak wages growth in Australia was having an impact on the retail sector.

“I think it’s a real factor, yes. I think it’s got to have some effect,” he said.

Mr Hay, who is also a former director of Myer, declined to comment on the current turmoil engulfing the famous Australian retailer.

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