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Amazon Prime Day: Major Retail Poised For A Slowdown

Even as Amazon expands its own use of physical storefronts, the Prime Day discounts it presents continue to represent a challenge to retail brands, says Foursquare's Sarah Spagnolo.

Amazon Prime Day kicks off on Monday, July 16 and for the 36-hour e-commerce discount period, retailers will be watching closely to see if there is a repeat in slower business this week.

As compared to an average summer week in 2017 (excluding July 4th week, which represents something of an aberration, as consumers seem to shop more before that holiday ) Foursquare found that:

  • Major retail categories saw the largest dips in foot traffic the week of Prime Day, with department stores and discount stores suffering the largest drop.
  • All major categories saw some recovery the week following Prime Week.
  • In the week before Prime Day (this data is not included in the chart), Big Box stores did see a lift in foot traffic, which could be attributed to the July 4th holiday.

Prime Day comes as June retail sales were up a bit —  0.07 percent seasonally adjusted from May’s strong performance and increased 4.2 percent unadjusted  — year-over-year as economic growth continued despite the U.S. trade war with China and other countries, according to the National Retail Federation. The numbers exclude automobiles, gasoline stations and restaurants.

“While more than 90 percent of shopping still happens in the real world, the week of Prime Day 2017 was the lowest foot-traffic week for retail stores for the entire summer,” says Sarah Spagnolo, Foursquare’s director of communications.

Source: Foursquare

While Amazon tends not to reveal the specifics of Prime Day performance, aside from noting stats like 2017 seeing a 60 percent rise in sales, Cowen and Company and J.P. Morgan Chase & Co. estimated spending on Amazon during the period as amounting to $1 billion — roughly three times an average day of sales on Amazon.

After being caught off guard by Amazon’s first Prime Day in 2015, retailers have been working to find a way to counter the deals with their own online discounting, as foot traffic to their brick-and-mortar stores take a definite hit during the period.

As we noted last year, Walmart, JCPenney, Macy’s, Barnes & Noble, Home Depot, Lowes, Sears, Kohl’s, Target and Best Buy all saw an average 24 percent decrease in traffic on Prime Day, according to data from mobile data analytics provider Sense360.

Seizing Prime Time Away From Amazon

In the meantime, retailers are trying to fight back with some Prime Day counter-programming.

As Buzzfeed details, Macy’s is touting its “Black Friday in July” with a 25 percent discount on most online items, Lowe’s is promoting a 10 percent price cut for new and existing MyLowe’s members and is even handing out free Google Home Mini devices to shoppers who spend more than $150 with them online.

In addition, Target has 30 percent off its branded home brands, 25 percent off beauty and personal care products, and as much as 30 percent off “top” Google products. Online shoppers who spend $100 on July 17 will also get a free six-month membership for same-day delivery through Shipt, a grocery delivery service owned by Target.

Amazon Gets Physical

Meanwhile, Geekwire notes that despite its dominance of e-tail, Amazon has close to 600 physical retail locations across the U.S. That’s primarily due to its 2017 acquisition of Whole Foods, but it’s also been steadily rolling stores such as Amazon Books, Amazon Go, AmazonFresh Pickup, Amazon Pop-Ups. On top of all that, Amazon has also been rapidly expanding its fulfillment centers to promote even faster delivery.

Meanwhile, Amazon’s instant-pickup has already begun in Los Angeles, Atlanta, Berkeley, CA., Columbus, Ohio, and College Park, Md. Initially, the items available with Instant Pickup include snacks, drinks and electronics, as well as some of Amazon’s most popular devices.

Amazon’s latest offering represents an expansion of the same-day pickup service at the 22 locations it began opening in 2015. These same locations will serve as Instant Pickup depots for Amazon Prime customers.

While available for free to Prime and Prime Student members, the program strikes at the heart of what has so far remained brick-and-mortar brands’ clear advantage over e-commerce: immediacy, which, even more than discounts, is the true challenge legacy retailers face.

About The Author
David Kaplan David Kaplan @davidakaplan

A New York City-based journalist for over 20 years, David Kaplan is managing editor of GeoMarketing.com. A former editor and reporter at AdExchanger, paidContent, Adweek and MediaPost.