Skip to main content

Amazon’s Private Label Perishables: How Grocers Can Fight Back

7/8/2016

With Amazon.com’s mid-May announcement that it will roll out its first line of private label perishables exclusive to its Prime members – which make up 55 percent of grocery shoppers and are anticipated to rise to 70 percent in the next 12 months – brick-and-mortar grocery retailers risk losing even more sales to the e-commerce giant, according to a new report from Carbonview Research, a sister brand of Progressive Grocer. However, grocers have tools to combat the threat.

The report found that roughly two in five (38 percent) consumers said that with the rollout, they would purchase parity products less frequently from grocery stores. About the same number reported that they would also do so in club, mass and drug channels, showing that no channel of CPG retail is immune to the threat.

And although private label products have a reputation among consumers of falling short of national-brand quality – and Amazon has stumbled in rolling out private label CPGs – grocery shoppers believe Amazon’s store-brand perishables will be of higher quality than other store brands and of the same quality as national brands, as well as more innovative and of better value than other brands overall.

“You definitely need to transition in small ways now,” says Rich Ratcliff, SVP of Deerfield, Ill.-based Carbonview.

One advantage grocers have over Amazon is knowing their customers in a way that the e-commerce company doesn’t. Retailers should determine the unique demographics and psychographics that define their customer base; their customers’ spoken and unspoken needs, fears and desires; drivers that get customers into their stores; how their customers define them; and how they would like their customers to define them.

“Our research has shown that shoppers will go out of their way to go to a store that offers a unique and engaging experience,” notes Ratcliff. “This might mean offering gourmet products. It could mean adding an experiential feature unrelated to shopping that no other store in the area offers.”

Grocers should consider building a fan base by offering amenities Amazon can't, such as chef’s presentations, tastings, pairing classes, beautiful displays, and thematic pop-up displays with curated products. A grocer’s strategy can't just be about products: Since nearly all products will be available online, and AmazonNow even delivers food in one to two hours in some urban environments, retailers need to ensure that they cultivate unique experiences for customers who take the time to come into their stores.

Additionally, grocers should consider taking a “radically convenient” and “proudly local” approach, adds Ratcliff: optimizing the times that people need to come into a store, when online isn't as convenient; focusing on fresh, prepared foods, value-added services, heat-and-eat meals, dietitian-curated meal plans and more; and becoming part of the social fabric of the local community.

“It’s all about that small-town experience," observes Ratcliff.

For more findings, Carbonview is hosting a July 14 webinar on this topic. Any retailer who hasn't already received an invitation can e-mail Laura Nicklin at [email protected]. Those interested in obtaining the full report can also e-mail Nicklin. 

X
This ad will auto-close in 10 seconds