With Christmas in July in full swing and retailers preparing for the golden quarter, Amazon is single-handedly changing the retail landscape.
Retailers are in the midst of their Christmas in July shows. While the month’s weather may occasionally merit the description summery, as far as retail planning is concerned, thoughts turn to retail’s golden quarter.
From the mouth-watering eats on offer to forecasts about this year’s top toys, retail is gearing up for its traditional peak.
Traditional is the key word. While the final three months of the year remain for many the time when profits are made, the retail calendar is changing radically.
Making money in July
While the Christmas in July events are in full swing, Amazon is potentially changing the game by making money in July – gobbling up shoppers’ cash that might otherwise have been saved for a spending splurge at the back end of the year.
This year the etail giant will once again run its Prime Day promotional extravaganza, tomorrow (July 12). It’s targeted at users of the Prime subscription service and designed to prompt more people to sign up.
Research by market intelligence service SimilarWeb shows that last year Prime Day generated 10.5 million visits to Amazon’s UK site – that’s from mobile and desktop devices. And there were 29 million visits to the top 25 online retailers as competitors launched rival deals and promotions.
The level of traffic meant Prime Day was the UK’s sixth-biggest online shopping day, ahead of established calendar red letter days such as Valentine’s.
It still ranked behind Christmas Day, Boxing Day and the cuckoo-in-the-nest Black Friday, which were the most popular online shopping days.
A changing retail landscape
But pause a few seconds to think about that. From nowhere, Amazon changed the landscape – something the retail industry is becoming used to.
Aside from the straightforward disruption to calendar norms, there are a couple of other key points about what Prime Day means for retailers.
The first is that subscription models are becoming increasingly common across retail. The reason is that customers are more likely to spend more when they subscribe to a retail service.
A study by RBC Capital showed that Amazon Prime members typically spend twice as much with the etailer than non-members.
You can see why Amazon Fresh (which carries additional charges to the customer) is at present only offered to Prime customers. Privileges of membership of subscription schemes – assuming the retailer keeps its promises – create loyalty among shoppers, especially when they are time-poor.
So what should other retailers do? Like Dixons Carphone, they can coincide their own promotional events with Prime Day, perhaps emphasising the democratic rather than restricted nature of their deals.
What retailers cannot do is sit back and let the promotional calendar and business models change around them.
At present, as Prime Day and similar new arrivals such as Black Friday change the market, only a retail turkey would rely on Christmas to make the tills ring.