Online retailer Amazon's plans to expand in Australia have slashed local retailers' share prices and led to sharemarket floats being canned.
But fund managers say forecasts that Amazon will rip apart rivals are over the top and have created buying opportunities, particularly for out-of-favour shopping centre owners.
Grant Berry is director and portfolio manager at SG Hiscock and Company, a fund manager specialising in Australian equities and property securities.
He suggested Amazon's expansion was the "hype" business story of the year and predicted the online marketplace would be lucky to nab 5 per cent of Australian retail sales - even over eight years.
Amazon had nabbed about 5 per cent overall retail market share in its native US and 3.5 per cent in the UK, Mr Berry said.
But the better comparison for Australia was Canada, he said, because of its low population density and higher labour costs. In Canada, Amazon has an estimated 1 per cent market share.
Furthermore, Mr Berry said smart retailers and good shopping centre owners have had plenty of time to plan for Amazon's expansion, which was first revealed by Fairfax Media 11 months ago.
"They have been moving away from apparel, to [the growth areas of] food, health and wellbeing, even almost upmarket dining," he said.
In addition, Mr Berry said the key metrics for shopping centres were "foot traffic and average spend, and the good centres are doing very well".
Investment required
The share prices of Westfield shopping centre owner Scentre Group, and rival Vicinity Centres (which owns half of Melbourne's mega-mall Chadstone) are both down more than 20 per cent since peaking in July last year.
"People have lost confidence, I guess, but we are more sanguine about this," Mr Berry said.
He added that even though Australians have used online shopping for a long time, they will still queue for the right attraction, such as the opening of beauty chain Sephora at Westfield Chermside in Brisbane last month.
???But Ian Carmichael, consumer analyst at Watermark Funds Management, said Amazon's expansion would mean not just market-share loss for incumbents but rising costs to improve their online offering and logistics.
"Price competition is appreciated, but what is perhaps less appreciated is how much investment will be required," he said.
"You go to a Myer or or Harvey Norman website today, it's an underwhelming proposition," he said. "Amazon lifts the standard in terms of what customers expect from online transactions and delivery."
Greg Peirce, co-head of corporate advisory at investment bank UBS, said the retail environment was "pretty tough".
