Big box retailers promote deals alongside Prime Day to offload inventory
With Amazon Prime Day now live, the summer online shopping season has kicked off. This year, big-box retailers continue to promote summer deals even if they aren’t overtly marketing against Amazon’s two-day shopping fest for Prime subscribers.
Overt promotion and flashy retailer reminders are no longer needed as most US shoppers expect Prime Day to hit every summer, e-commerce analysts said. Customers are already trained to seek out deals, and especially this year when some retailers like Target were already offering markdowns even before Prime Day to get rid of excess merchandise in categories like electronics and homewares. But, the eagerness of big-box retailers to promote their own sales this week underscores how Amazon continues to define the sales cycle in e-commerce.
The prominence of Prime Day has led to an increase in the number of retailers running their own two-day specials in an effort to compete with Amazon. Amazon first hosted Prime Day in July 2015. Rival Target launched Deal Days, a series of side promotions alongside Prime Day, in July 2019.
A spokesperson for Walmart, the nation’s largest retailer, told media last week that the company would not hold any events to compete with Prime Day this year. That’s because so much of Walmart’s merchandise was already on sale — it’s still offering online discounts on thousands of products under “Rollbacks.”
Deals offered by various big-box retailers highlight their priorities — and the categories they’re trying to move inventory into. Target — which is typically one of the most popular destinations for back-to-school shopping, according to surveys — is running a 25% discount on toys from entertainment giant Disney. Target’s Promo Days, which end today, also feature multiple promotions on apparel, electronics, swimwear and a line of personal care products. Bed Bath and Beyond, meanwhile, advertises deals on smaller kitchen gadgets, like $20 blenders and $60 coffee makers respectively, in addition to hundreds of “door-to-door deals.” deals” on home décor items costing as little as $5. Clothing discounts dominate the Kohl chain store website.
“Anyone can participate in these offers that aren’t on Amazon, and they could be influenced by incentives like Kohl’s Extra Cash, Target loyalty points, and extra cash back opportunities,” said Jen Jones, Marketing Director at Commercetools, a headless business. company that works with retailers like H&M, Sephora, LLBean and Lululemon. “That said, these steep price discounts are now tied to the excessive inventory these retailers are facing, thanks to supply chain delivery delays, hot pandemic items that have fallen out of favor and slowing consumer spending. into physical assets in the midst of a looming recession,” Jones added.
This summer, many retailers are struggling with excess inventory of products that consumers no longer want as their shopping habits have changed. Target and Walmart executives both said their companies are struggling with excess inventory in categories that have been trending during the pandemic, such as home goods, as people spend more money on travel and entertainment. During their respective first quarter results, Target reported that its product inventory was up 43% from a year ago, while Walmart’s was up 32%. To move the merchandise, both retailers have turned to strategies such as discounts.
Nonetheless, there’s a certain halo effect to rolling on Prime Day. On average, non-Amazon retailers see a 40-50% increase over an average day of online sales during Prime Day, according to data from Insider Intelligence. “The rise of Prime Day has resulted in significant net new sales demand during an otherwise sleepy time of year for retail,” said Insider Intelligence analyst Andrew Lipsman.
Jones echoed Lipsman’s sentiment. “While many Prime users will eventually choose to buy from Amazon to use up their Prime subscriptions, competitors will still see traffic spikes containing vital data on popular products and trending items.”
As more shoppers look for deals this summer, retailers have also been experimenting with other types of sales, in addition to Prime Day clones. Walmart, for example, held its own event a month earlier between June 2 and June 5 to generate Walmart+ subscriptions. Customers who signed up for Walmart+ at a company store during the event titled Walmart+ Weekend received a $20 promo code off their next online purchase.
“It made sense to try its own event given that Walmart+’s value proposition may have never been higher, with its fuel savings and overall positioning on low prices in an inflationary environment. rampant,” Lipsman said. But, he added that the success of the standalone event was unclear.
Ultimately, competition is unlikely to hurt Amazon, Lipsman said. “It still deals with the competition and remains the first place buyers will go for deals on Prime Day. Shoppers still have disposable income, but are in a more bargain-hunting mood than in the past two years, which should fuel healthy demand for this year’s event,” said Lipsman.