Analyst: Across the board adoption of Amazon Prime not imminent
Approximately 80% of low-income households will not opt for Amazon's new discounted Prime program.
That's according to a broadlines and hardlines retail report by Gordon Haskett Research Advisors analyst Chuck Grom, which looks at Amazon, Walmart, Dollar General and Dollar Tree as Amazon announced discounted Prime membership for those on federal assistance. Here are excerpts from Grom's report:
With news out that Amazon will be offering a 45% membership discount for those on federal assistance interested in Prime ($5.99/month vs. $10.99/month currently), shares of Walmart, the dollar stores (Dollar General, Dollar Tree), and other retailers (largely auto part retailers) that cater to the low-end consumer have been under duress. In order to evaluate the potential success of the new initiative, we conducted a 500 person survey (over the past 24 hours) focusing on the low-end consumer (less than $40,000 household income) around current Prime penetration and willingness to join at both the old and the new discounted rate (key takes herein).
Two points: First, 26% of those surveyed were already Prime members (lower than our national avg. estimate of two-thirds). Second and more importantly, roughly 80% of consumers not willing to pay the current $10.99 monthly fee would still not pay the lowered $5.99 rate. This is much higher than we would have expected, and suggests across the board adoption is certainly not imminent.
Said differently, while the Prime news certainly falls into the “risk bucket” for the low-end retailers, we see the concerns (and recent negative stock reactions) as a bit overblown and view the pullbacks in Dollar General and Dollar Tree, in particular, as an opportunity on the long side.
For additional thoughts/survey results, click here.
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Beauty retailer steps up augmented reality offering
Sephora is upgrading its app-based digital makeover experience.
The beauty chain is expanding the functionality of its Sephora Virtual Artist, an augmented reality-based feature on its mobile app that enables shoppers to digitally try on make-up. The app’s new Cheek Try On service allows users to virtually try on over 1,000 shades of cheek color, including blush, bronzer, contour, and highlighter shades available in single colors and palettes.
As users choose their favorite shades, a list of the top matching colors available from Sephora is quickly returned to the user. Matches can be immediately tried on in Virtual Artist then purchased in app.
The Sephora Virtual Artist also enables users to virtually try on an assortment of lip colors and false eye lash styles. The tool integrated the ability to try on thousands of shades of eyeshadows earlier this spring.
The retailer has made other enhancements to its Virtual Artist service, including integrating its virtual try-on services with its library of “Expert Looks.” Once customers test their preferred cheek shades, they can pair their favorites with lip and eyeshadow colors and false lash styles. Users can then save their favorites to “My Looks” and share them with friends.
Sephora’s app also added a “Color Match for Virtual Try On” feature. The service uses artificial intelligence to detect and accurately estimate the shade in any photo and match it with a lip, eyeshadow or cheek products available at Sephora.
The Color Match feature dovetails into the beauty retailer’s Color Match for lip, a service available within the Sephora Virtual Artist bot on Facebook Messenger. By adding the feature into the Sephora app, users can use their smartphone camera to snap a selfie. AI deciphers the image, and suggests a predominant color. Customers can pick any color from the list of available matching shades, and make a purchase through the app.
iOS users can download the app in Apple Store. Android users can access it in Google Play.
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