I did not intend to lead this post off with Amazon’s Prime Day, but the recent mega-event has been difficult to ignore for anyone in the retail industry – or consumers for that matter. And besides, it’s more interesting (and frankly a lot more uplifting) than writing about retail store closures, bankruptcies, and plummeting stock values. Yes, there is a correlation between the two topics, but that is a different theme for another day.

Amazon Prime Day was actually more than a day, as it clocked in at 30 hours. It’s an invented “holiday,” following on the steps of Alibaba’s even more successful Chinese online shopping day, Singles Day. But why not? If a greeting card company can make up holidays (sorry Hallmark, but what really is “Sweetest Day”?), then why shouldn’t any retailer create its own reason to get customers excited and shopping? Actually most retailers do offer promotions to lure customers to shop, they just don’t quite do it as well as Amazon.

Where does Amazon Prime Day fit now in terms of other holiday shopping events? It’s hard to calculate the overall impact across all retailers for the one day, but in relative terms:

  • The Christmas season last year (November-December) produced over $650B in sales
  • Note that Adobe estimated that Black Friday weekend produced over $12B in online sales for the 5-day holiday (Thursday through Monday)
  • Mother’s Day, Easter, and Valentine’s Day each see $18-24B in sales
  • Halloween is $8-9B in sales
  • Amazon Prime Day – $1+B (estimate)
  • Alibaba Singles Day – $15B

As a trend, it’s more than impressive. Is it more than this? Perhaps. Choose your preferred term – evolution, disruption, revolution, etc. Just don’t call it the “death of retail as we know it.” However, what it should tell retailers is that they need to improve their focus on customer experience, they should be able to create highly personalized offerings and experiences, and they should be able to leverage both in-store and online experiences to compete more effectively in today’s changing retail world.

In one recent article, it was mentioned that “Amazon wrecked the mall…” I really don’t agree with this; I think it’s more that traditional retailers have not evolved fast enough and just want an easy scapegoat. Amazon’s an easy one. Most consumers still enjoy the social aspect of shopping, as well as being able to see, feel, touch, try on, and get instant gratification in their shopping experiences. Online can’t do that, and that’s exactly why many digital retailers are dipping toes into brick-and-mortar. ThredUP (and yes, Amazon) is a good recent example – taking thrift shopping into the digital world, but recognizing the thrill of the hunt in the physical channel is still very much desired, so they’re opening stores.

Beyond this, looking ahead a few months to this year’s holiday season, what implications might there be? As a retail merchandising or supply chain executive, what does your company want (or need) for the upcoming holiday season? Let me give you one more potential complexity to think about, and 2-3 ideas of what you might want to have on your list.

Holiday 2017 will see Christmas eve on a Sunday for the first time in 11 years (the workings of our calendar surprise me as well). On the one hand, having the last shopping day before Christmas on a weekend day is a positive, with typically less people working and more likely to make a last-minute shopping trip. On the other hand, the last day before Christmas falling on a day when UPS and Fedex typically do not make home deliveries could have a significant impact on what is under the tree.

Given that this last happened 11 years ago—before the vast majority of shoppers even ventured heavily into on-line shopping—provides an interesting confluence of variables. Clearly consumers have different expectations than they did 11 or even 5 years ago. Ecommerce sales as a percent of total retail sales has more than doubled since 2006 (2.9 to 8.2%). There have been generational shifts in behaviors as well. And technology continues to play a big part.

Source: https://alfred.stlouisfed.org/release?rid=179

But practically speaking, what kind of impact will this have on shopping, both in stores and online? One scenario is that retailers will get the word out on timing with specific order and shipping deadlines, and consumers will place online orders earlier. Another scenario is that some consumers will still wait until the last minute, and will simply have an IOU or picture of a forthcoming gift, or perhaps a gift card (disappointing to many gift recipients, but it does happen). And a final scenario is that shoppers who wait until the last minute will make a mad dash to stores.

What should a retailer do to prepare for this relatively unusual timing?

  • Begin publishing ecommerce order deadlines and shipping options sooner, no later than Thanksgiving
  • Work on incentives and promotions for buying earlier—given the state of retail, there will clearly be less depth of inventor: get the word out
  • Prepare and enable new or enhanced capabilities, such as Buy Online Pick-up In Store (BOPIS) and visibility into inventory availability to allow consumers to find what they are looking for
  • Ensure stores and customer service are prepared for a potential last-minute shopping surge
  • Determine what your best customers want and how they want to shop; now and longer term, retailers must leverage the vast amount of data they have already accumulated, coupled with advanced analytics to anticipate what consumers need before they need it (or know they need it), offer the best price and offer multiple ways of delivery to accommodate varied lifestyles and schedules

Perhaps this year, Amazon is once again a step ahead of other retailers, as the estimated surge in Amazon Prime subscriptions achieved on Prime Day alone speaks volumes about how this single day could potentially impact the rest of the year—including the 2017 holiday season. Estimates about Amazon Prime shoppers put their buying volume (from Amazon) at anywhere between twice to over four times as much as non-Prime shoppers.

Forget Christmas. Get people buying when shipping is easier.

Published On: July 20, 2017Categories: Clay Parnell, Holiday Spending, Retail Incentives