As an Amazon Associate I earn from qualifying purchases from amazon.com

What Amazon Prime Day And Other ‘Christmas in July’ Events Predict For Holiday 2022



Furniture World News Desk on

8/16/2022




Amazon Prime Day event, held July 12 and 13, broke records to become the biggest event in company history. However, the company didn’t provide a final sales tally, and we likely won’t get the results until next quarter. As it is, news from the retail giant wasn’t so good in the second quarter, with revenue growth down from 7.3% in first quarter to 7.2% in the second, marking its slowest growth over the last 20 years.

Still, the company said 300 million items were sold worldwide, up from 250 million last year, and Amazon selling partners generated over $3 billion, nearly a 60% increase over the $1.9 billion sold in the previous year. Overall, consumers saved $1.7 billion during the event.

Meanwhile, independent research firms have been busy crunching numbers to measure Amazon’s Prime Day results, including Adobe Analytics, Numerator, Placer.ai, YipitData and RetailNext.

Adobe figures Amazon generated $11.9 billion during Prime Days, up 8.5% from last year, with the week running 6.1% over previous year to bring in a weekly total of $22.4 billion in sales.

Numerator reported per household spend this year was up by 26%, from the high $150’s last year to just under $200 this. “Prime Day 2022 outpaced past years, with more households shopping [30% over 27% in 2021] and higher spending,” it said.

And some analysts looked sideways at results from Target and Walmart’s concurrent sales events aimed at stealing some of Amazon’s thunder. RetailNext observed Prime Day’s ‘halo effect’ has lifted brick-and-mortar traffic by as much as 8.5% historically, though it wasn’t so high this year, with sales dipping in retailers catering to home products and jewelry.

However, RetailNext found a “surge” in foot traffic to apparel retail stores. And Placer.ai, which tracks retail foot traffic, measured an uptick at Target and Best Buy.

“Prime Day 2022 demonstrates the ongoing ability of retail holidays to generate excitement and urgency even during an especially difficult economic environment,” Ethan Chernofsky, vice president Placer.ai shared with me.

“Visits to major retailers that designed complementary efforts peaked compared to previous years. The draw of doorbusters – even if driven by excess inventory – could create a context for significant year-over-year growth,” he continued.

Inflation headwinds

But these impressive results need to be placed into context within the broader retail economic environment. Now running at an annual rate of 9.1%, inflation is steadily chipping away at consumers’ spending power. And it is even higher in essentials like food up 10.1% more, household furnishing and supplies rising 10.2% and motor fuel up a whopping 60.2%.  

At its elevated rate, inflation accounts for virtually all the uptick in retail sales measured by the Census Department through June. Overall retail sales advanced 8.8% in the first six months of the year, not including food services which is the second fastest growing category, up 22% year-over-year.

And if we also take out gasoline stations, the number one growth category up 41% year-over-year, total retail sales grew only 5.8%, from $2.9 trillion in 2021 to $3.1 trillion this year.

Any way you look at it, retail is falling further and further behind when inflation is factored into the equation.

So what can be learned from Amazon Prime Day and other ‘Christmas in July’ sales events as we look out over the second half of the year, especially to the runup for Holiday 2022?

Needs before wants

First, essentials will be on top of the shopping list, so consumers will prioritize personal and gift spending based on needs versus wants.

Numerator’s Prime Day Survey found consumers planned to buy more household essentials, health and beauty, grocery, pet care and baby items during the event. By comparison, purchase plans for consumer electronics, apparel and shoes, home and garden, smart home devices, toys and video games, and books, videos and media either dropped or declined year-over-year.

One-in-five shoppers expected to buy gifts for holidays and other occasions, but over one-fourth said their purchases would lean toward everyday items they normally buy. And 28% of the over 6,000 consumers surveyed said they’d pass on buying specific items despite being offered a “good deal” if not considered a “necessity.”

Adobe also found consumers shifted to purchases of more day-to-day products and YipitData confirmed this trend toward practical, useful purchases.

It found that home goods bumped electronics out of the number one most purchased slot after two years when electronics led. YipitData’s Ariane Turley suggested this was a direct result of consumers scaling back high-ticket purchases.

In the broad home category, kitchen and dining was the breakaway best performing category. The kitchen and dining category includes cookware, bakeware, dinnerware, cutlery, kitchen and table linens, utensils, kitchen stores and appliances.

And unexciting but much-needed vacuum cleaners and floor care also were prime movers within the broad home segment during Prime Days. YipitData also found an uptick in tools and garden/patio purchases this year compared with Prime Day last. Beauty was flat and apparel down.

These results suggest that retailers should be well-stocked in everyday essentials and practical gift items this holiday season. Gift choices that leaned toward indulgence items last year will likely be passed over this year in favor of things people need and will use. And consumers are likely to gift more ever-reliable gift cards to let recipients make their own choices.

Target over Walmart

Numerator found that after Amazon Prime Day, which had 95% consumer awareness, Target Deal Days were right behind, known by 84%. Walmart+ Weekend was a non-starter, recognized by only one-third of consumers surveyed.

Further, Target DD drove more customers to shop, with 57% saying that was the primary reason they shopped Target compared with 41% for Amazon Prime Day.

And Target led in overall customer satisfaction. Over 80% of Target shoppers were highly satisfied with their experience compared to 64% for Amazon Prime Day.

While a majority of Walmart+ Weekend shoppers were also highly satisfied (69%), it just wasn’t the draw for shoppers compared with Amazon or Target. Some 52% of Walmart+ event shoppers said it had little-to-no influence on their shopping choice.  

Despite Walmart being more than five times bigger than Target, $573 billion last year compared to Target’s $106 billion, Target shined brighter in its ‘Christmas in July’ sales event. That sets Target up well to bring back more customers through the back half of the year.

Promotions on steroids

With no end in sight for inflation and the rising threat of a recession, consumers are going to favor retail destinations where they can get the most for their money. They will need to stretch their dollars by watching for sales and promotions that promise them more for less.

Retailers are also being hit by inflation-pressures that raises their costs for doing business. Yet they will need to budget more in advertising and promotions during third and fourth quarter to stay on consumers’ radar.

That appears to be exactly what Amazon has in the works. Business Insider just reported that leaked documents indicate Amazon has another two-day Prime Day event planned for this October. If true, this would be the first time Amazon ever held two Prime Day events in one year.

By hosting a repeat Prime Day event this October, Amazon has nothing to lose and everything to gain. Its performance in the first quarter was disappointing with revenues up only 7% over previous year, the slowest rate in any quarter since the dot-com bust in 2001. And it was the second straight quarter Amazon reported single-digit growth.

Assuming Amazon goes forward with another Prime Day event this fall, competing retailers better hope the ‘halo effect’ still holds. However, Joe Shasteen, RetailNext global manager, said the ‘Prime Day lift’ is no longer automatic.

“Offering big discounts is no longer enough to lure in customers,” he shared. “Retailers also need to invest in optimizing operations, supporting and empowering sales associates and delivering the kinds of compelling experiences that truly differentiate in-person and online shopping.”

 


 


About Pam Danziger: Pamela N. Danziger is an internationally recognized expert specializing in consumer insights for marketers targeting the affluent consumer segment. She is president of Unity Marketing, a boutique marketing consulting firm she founded in 1992 where she leads with research to provide brands with actionable insights into the minds of their most profitable customers.

She is also a founding partner in Retail Rescue, a firm that provides retailers with advice, mentoring and support in Marketing, Management, Merchandising, Operations, Service and Selling.

A prolific writer, she is the author of eight books including Shops that POP! 7 Steps to Extraordinary Retail Success, written about and for independent retailers. She is a contributor to The Robin Report and Forbes.com. Pam is frequently called on to share new insights with audiences and business leaders all over the world. Contact her at pam@unitymarketingonline.com.

 


We will be happy to hear your thoughts

Leave a reply

Sharkr
Logo
Compare items
  • Total (0)
Compare
0
Shopping cart