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This Is How Grocers Can Take Advantage of Amazon’s Prime Day

This Is How Grocers Can Take Advantage of Amazon’s Prime Day

Other grocers have the opportunity to take advantage of Amazon's Prime Day as well with their own special offers.

Amazon’s fourth Prime Day event is set to start on July 16th and Whole Foods is expected to take part with discounted food offerings and exclusive Amazon Prime member deals. Although this event is poised to increase traffic to Amazon’s e-commerce website and Whole Foods stores, other grocers have the opportunity to take advantage of this event as well with their own special offers.

Coresight Research predicts that this year’s Prime Day sales will increase by 40 percent compared to last year’s to reach a minimum of $3.4 billion globally. The event will also be the longest Prime Day event ever held with 36 hours of shopping time. In an email to Retail Dive, the market research firm said that these figures are a conservative estimate because the online retail giant has invested in a longer promotional period for this year’s event. In addition, the e-retailer will be extending their Prime Day savings to customers worldwide.

This spells out serious competition for other retailers, including food companies, as Amazon will be extending their deals to their Whole Foods grocery stores for the first time. Whole Foods plans to offer discounts on selected food items with an additional 10 percent off on already reduced prices. The grocery chain will also be offering 10 percent cash back, which is double the usual amount of 5 percent, for all shoppers using the Amazon Prime Rewards card. The e-commerce retailer will also be offering 30 percent discounts on their private label brands such as Presto!, Mama Bear and Solimo.

However, the most concerning part about this event for grocers is that it is poised to increase Amazon Prime memberships with exclusive Prime member deals. This means that the e-retailer might nab more loyal consumers and strengthen their membership program this year. This trend was already observed during last year’s Prime Day when Amazon got more Prime signups than any other day in its history.

This is why grocers and other retailers must act now to take advantage of this increased spending behavior by offering special deals themselves. In fact, market research firm Criteo identified a halo effect that occurs during Amazon Prime Day, which means that retailers have already benefited from offering special discounts during the event.

The firm compared an average week of sales between over 400 retailers in June 2017 to sales during the week of Amazon Prime last year. From their research, Criteo found that there was an average sales increase of 57 percent in multiple categories. Retailers that prepared for Prime Day and offered discounts prior to and during the event experienced that greatest increase in sales at 30 percent. Stores that followed Amazon’s timing and offered discounts closer to the event experienced most of their sales during Prime Day itself and experienced a 25 percent increase in total sales. Those who ignored the event altogether and did not offer any discounts saw a five percent increase in sales.

Although these numbers primarily come from categories such as fashion, health/beauty and home improvement, they are a useful tool for anticipating sales results this year. With Whole Foods in the mix, Prime Day will have a significant effect on the food industry, especially if more consumers sign up for the Prime service. This is why grocers are advised to invest in strategic sales campaigns prior to the event in order to attract the attention of consumers before they even consider Amazon or Whole Foods as a grocery destination.