Prime Day promises to bring pain — but also opportunity — to grocers
- Amazon Prime Day sales are expected to grow at least 40% this year to $3.4 billion globally, according to Coresight Research. The day-and-a-half sales event includes discounts on hundreds of products, and for the first time will include offers at Whole Foods.
- Whole Foods stores will run deep discounts on select products along with an additional 10% off already listed sales items throughout stores. The chain will also offer 10% cash back for its Amazon Prime Rewards credit card — double the usual amount. Meanwhile, Amazon.com will feature 30% off private label brands like Presto!, Mama Bear and Solimo that include grocery offerings.
- Many retailers prepare special discounts timed to Prime Day, and supermarkets are no different. According to a survey by refrigeration company Phononic, 35% of retailers are planning discounts timed to the event.
Prime Day promises to be another Amazon sales bonanza that puts added pressure on competing retailers. For supermarkets, the worry is that not only will deals divert traffic away from their stores, but that they will spur a host of new Prime members, thus strengthening the loyalty program that has become Amazon's main leverage point since it bought Whole Foods last summer.
The metrics certainly support a windfall for the online retailer. Last year's Prime Day sales increased 60% over the previous year — the same percentage growth seen the year prior. Amazon also saw more Prime signups than any other day in its history.
So how can grocers combat this sales coup for the online giant? It turns out the best policy may be to ride the wave.
Indeed, retailers have run discounts and promotional campaigns timed to Prime Day in years past, and have benefited greatly. According to marketing firm Criteo, average sales across more than 400 retailers increased 57% across a range of categories during the week that included Prime Day last year. Department stores and big box stores were the biggest winners, the firm noted, with sales up 124%.
Could grocery stores see a similar uptick in sales if they run competing discounts? Grocery spending is more fixed, so it's hard to imagine consumers racing out to buy a lot of extra food. But retailers could spur regular customers to make an extra trip, or to add a few extra items to their regular shop. Prime Day this year begins on a Monday — a popular stock-up day for consumers.
Criteo recommends that retailers hold off on running discounts until Prime Day so as to maximize the impact. The firm also underscored the importance of effectively promoting sales items and, if possible, to run the deals under a promotional umbrella. In past years, some retailers have aired a "Black Friday in July" sale.
Retailers may be reluctant to go toe-to-toe with Amazon, but sitting on the sidelines may be the worst thing a company can do. According to Criteo's data, those retailers that didn't offer discounts around Prime Day saw a 5% sales increase during the week of the event.
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