Retailers follow Amazon’s lead on summer shopping events
Retailers follow Amazon’s lead on summer shopping events
Membership has its benefits at Walmart this week. The megaretailer is offering discounts on gas and travel bookings, a free trial of express delivery, plus early access to new products for its second annual Walmart Plus Week — a sales event that appears to be a not-so-thinly veiled attempt to beat Amazon Prime Day to the punch.
Amazon’s discount bonanza will — as usual — be held in July, with the exact dates still TBD. But it’s spawned a slew of imitators and alternatives that have turned the summer into something of a mini-Black Friday for many retailers.
Traditionally, summer was a slow time in retail, said Katherine Black, a partner at consulting firm Kearney.
“Summer sales used to be sort of around key holidays. So it was Memorial Day, Fourth of July,” she said.
You’d see discounted barbecues or camping equipment.
But when Amazon — which is a Marketplace underwriter — created its own all-purpose summer shopping holiday in 2015, the retail world took notice. We now see corresponding promotions from Walmart, Target, Best Buy, Macy’s and others.
“If Amazon’s doing it, we should also think about it, but also, you know, summer is to back-to-school a little bit like fall shopping is for Black Friday,” Black said.
That is, it’s a chance to get people hooked before a major spending season.
And increasingly customers are hooked with paid annual memberships, said analyst Arun Sundaram at CFRA Research.
“They’re not necessarily making a lot of money off of this because, you know, potentially really heavy discounts and promotions going on,” he said. “But if you drive memberships, you have more loyal customers.”
Not just loyal customers, but usually bigger-spending ones too.
Sundaram said these programs tend to appeal to consumers who prize convenience. They’re willing to pay more to get it.
“The Walmart Plus membership tends to bring in more higher-income households, which Walmart has historically had trouble bringing in and retaining,” he said.
Memberships don’t just provide retailers with a loyal customer base. They also provide data, said Koen Pauwels, a marketing professor at Northeastern University.
“And that’s basically the exchange that you make as a consumer. You get some discounts and some other things, but the retailer now has just way better data on you,” he said.
That data might include how you respond to sales promotions, your age, gender or address. “And so lots of retailers have become very good at giving personalized discounts,” Pauwels said.
He said that drives sales and advertising revenue, which is usually a lot more lucrative for retailers than just selling stuff.
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