4 Things Grocers Should Watch for on Prime Day 2018

4 Things Grocers Should Watch for on Prime Day 2018

Randy Hofbauer
Digital and Technology Editor
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As tradition now goes with every July, Prime Day is back. For the the fourth year in a row, ecommerce giant Amazon is offering its own unique version of Black Friday during its anniversary month to provide special savings exclusively to Amazon Prime subscribers.

But there’s a difference this year: 2018 is the first year in which Amazon, now among the top grocers in the United States, makes its move into consumables. Whole Foods Market stores now figure into the mix, with Prime members able to secure an additional 10 percent off hundreds of sale items throughout the stores, along with deep discounts on select personal products. Online, Amazon will feature the “lowest prices” on a wide array of packaged private label goods.

While previous Prime Days have always proved to set record sales for Seattle-based Amazon, 2018’s event will be the year that “Amazon makes the value of Prime Day tangible,” said Jordan Rost, VP of consumer insights with Chicago-based market research firm Nielsen.

“With their 10-percent-back offer at Whole Foods stores, Amazon is extending the value of Prime Day and Prime membership to the physical brick-and-mortar retail environment as well,” Rost explained. “Prime Day has always been about proving the value of Prime membership, and with Amazon's ability to extend that to physical stores, other retailers have never had more urgency to up their omnichannel execution.”

What else can both online grocers and brick-and-mortar operators expect from Prime Day 2018? According to Rost, look for:

Amazon-Whole Foods leveraging private label

Grocers today are “keenly interested” in bolstering sales of their own brands, so it wouldn't be surprising to see Amazon leverage its own private label lines to continue advancing the value of Amazon Prime membership. According to Nielsen’s latest data, across a sampling of five omnichannel retailers that sell salty snacks, store brands garnered five additional points of share online relative to brick-and-mortar operators, while the top five brands garnered five points fewer online versus in-store.

“We see growth among digital advocates – invested in buying online – and tech-savvy value seekers – look for deals online and follow them wherever they are – which also reinforces the downward pressures that ecommerce retail exerts on prices,” Rost noted. “Amazon Prime Day is simply part of the larger battle that retailers and suppliers are waging.”

Personalized Prime offers

This year’s Prime Day may take personalization to the next level, Rost asserted. With its acquisition of Austin, Texas-based Whole Foods last year, alongside innovations such as Alexa-enabled personal assistant devices such as the Echo and Echo Dot, data could take center stage, with online and offline data sets fueling Amazon’s personalization efforts.

“The weekly circular is no longer enough,” he stressed. “Embrace real-time optimization of personalization programs.”

The ‘Prime effect’ for online grocery

Currently, fast-moving consumer goods (FMCG) in the United States see only 25 cents spent online for every five dollars spent overall. This compares with more advanced countries like South Korea, where nearly one in every five dollars spent on FMCG goes online. Using personalized Prime Day food and beverage specials to encourage shoppers who previously weren’t comfortable buying groceries online could be the tipping point that Americans need to get accustomed to this new shopping behavior, Rost explained.

“Prepare for the online shift,” he warned. “By 2024, 70 percent of U.S. consumers will be grocery shopping online, and they expect a seamless experience across channels.”

Prime Day pop-ups

Amazon is investing heavily to bring the best of its digital shopping to physical stores, which gives the retailer a unique opportunity to expand Prime Day with pop-ups at brick-and-mortar stores, using online data to customize the best deals locally. For instance, grills and summer decor could be a hit in one neighborhood, but another area may cater more to customers seeking deals on cameras and personal technology. Prime Day pop-ups could also offer instant gratification for online customers, enabling them to pick up Prime Day purchases the right way in-store.

“All in all, technology is disrupting the way people shop,” Rost said. “But as Amazon and Prime Day show us, it’s also enabling retailers and brands to personalize marketing and shopping experiences at scale for the first time ever. In order to embrace this opportunity and stay relevant in the new shopper journey, companies need to shift their focus from knowing their store or their category to knowing their customers – each one.”

About the Author

Randy Hofbauer is the former digital and technology editor of Progressive Grocer. He has more than a decade of experience as a content strategist, researcher and marketer, almost all of it covering CPG retailing. His insights and work have been cited in a nu Read More