How the Amazon Grinch Stole Retailers’ Christmas
By Rodney Mason, CMO, Parago, [email protected]
In its annual survey of holiday spending trends, Deloitte reports that 46% of consumers plan to do their holiday shopping online. That puts online shopping in the number-one position for the first time in the survey’s history. Deloitte also found that nearly six out of 10 shoppers plan to use self-help technologies in-store when holiday shopping.
In a recent national study, “Dynamic Pricing in a Smartphone World,” Parago found that 58% of all adult smartphone owners engage in showrooming — a stat that falls squarely in line with Deloitte’s survey results. That amounts to roughly 7.5 million U.S. consumers, according to digital analytics firm comScore, and the number is growing. In fact, shopping for the best price is a practice that spans multiple income levels:
- Consumers with annual household incomes of less than $200,000 name price as the number-one influencer on purchase decision.
- 76% of shoppers from households earning above $200,000 per year actively showroom.
Brick-and-mortar retailers are attempting to combat showrooming by curtailing price searching via search engines such as Google. By creating custom SKU numbers and developing exclusive brands and items, they hope to keep their products from being matched across retailers through Google search engine queries.
But these tactics are not effective, because the problem isn’t with Google.
Amazon outpaces Google for showrooming
As the 2013 Parago study demonstrates, showrooming is being conducted via Amazon twice as often as it is via the Google search engine. Using Amazon’s Price Check app, shoppers can scan or enter SKU numbers — or even upload pictures of items — to find a product near-match. And as the study shows, the vast majority of consumers will buy the near-match product if it means they can save money.
To salvage their holiday, some major retailers are electing to match Amazon’s prices. This makes sense in the short run, but given Amazon’s razor-thin margins and lower overhead, it’s not a sustainable strategy.
The price-match rebate: a more cost-effective solution
Participants in the showrooming study were asked if they would purchase from a store if that retailer offered a price-match rebate. The majority responded that they would — and that they would shop at and buy from the store more often if this type of rebating were an ongoing, promoted policy.
Price-match rebates offer retailers a way to combat showrooming that is more cost-effective than price matching. Plus, they afford the retailer an opportunity to pull the customer back into the store for a subsequent purchase through a bundled offer tied to the rebate reward (e.g., “Bring this Visa prepaid card back to our store in the next week to get another $10 rebate”).
So yes, retailers may have some of their holiday jingle stolen by Amazon this season. But with the recent rollout of price-match rebates, there’s hope for a Happy New Year.
Rodney Mason is CMO of Parago, a global thought leader and provider of incentives and engagement. Parago delivers over $2 billion in rewards to 50 million people each year for global brands. Its newest study, “Dynamic Pricing in a Smartphone World,” can be found on Parago.com/contact-us/showroomingstudy.Mason can be followed on Twitter at Twitter.com/rodmoose and contacted at [email protected].
Safeway sells 11 Dominick’s stores to Roundy’s
Safeway has reached a definitive agreement to sell 11 of its Dominick’s stores in the Chicago metropolitan area in a cash and lease assumption transaction to Roundy’s. Roundy’s will take possession of the stores during a transition period that will take place in the next two months.
The transaction is subject to customary closing conditions.
Earlier this year, Safeway announced its decision to exit the Chicago market and focus its efforts in other operating areas where its business is stronger. The company continues to be actively engaged in a process to identify purchasers for its remaining stores in the Chicago market.
Safeway previously announced the sale of four stores in the greater Chicago area to New Albertsons, which operates Jewel-Osco grocery stores.
Adobe reports record Cyber Monday sales
Online sales on Cyber Monday increased by 16% to $2.29 billion compared to last year, according to Adobe’s Digital Index 2013, and a record 18.3% of those sales came from mobile devices — a surge of 80% compared to last year.
Consumer shopping preferences continued to shift online with Cyber Monday being the fifth day in a row of record-breaking online sales. While “brick and click” retailers dominated Thanksgiving weekend sales, Internet retailers generated the most sales on Cyber Monday with a 42% share.
Adobe’s online shopping data is based on the analysis of nearly 900 million visits to 2,000 retailers’ websites on Cyber Monday and more than 3 billion visits since Thanksgiving Day. Total online sales for Cyber Monday came in just 1% above Adobe’s prediction from Nov. 5. The data also showed that 70% of online sales with the top 500 U.S. retailers — taken from Internet Retailer’s top 500 list — are generated by companies using Adobe Analytics, a key component of Adobe Marketing Cloud.
“Retailers earned 10% of their holiday sales in just the last five days, an increase of 26% year-over-year,” said Tamara Gaffney, principal analyst, Adobe Digital Index.
Smartphones and tablets drove $419 million in online sales on Cyber Monday, a new record according to Adobe. Tablets generated the majority of mobile-driven sales at 12.7% of total online sales. iPad took the lion’s share with 10.1% while Android based tablets generated $23 million or 1% of total sales. Alaska and Hawaii had the largest mobile sales revenue with 26.6% compared to the 18% national average.
Social media sites drove $148 million in online sales between Thanksgiving and Cyber Monday, a 2% share and flat compared to last year. Twitter’s share grew most (up 24%) to 9% of total online sales. Pinterest also saw strong growth increasing its share of referral traffic by 17% year-over-year. Facebook drove 64% of all social media driven sales, an increase of 12%.
iPad continued to generate the most social media buzz of any tablet followed by the Samsung Galaxy tablet. PlayStation 4 was the leader in social media traffic on game consoles in the last five days.
Although retail promotions dramatically impacted Black Friday, pushing online sales up 39% year-over-year, Cyber Monday shopping patterns were consistent with previous years. Cyber Monday sales peaked between 8 and 9 p.m. EST with sales bringing in $150 million in one hour.