OPERATIONS

Study: Amazon low-price leader in several categories

BY Dan Berthiaume

Ottawa, Canada – Amazon.com was the predominant low-price leader in several product categories from January through early April 2014. 360pi compared the pricing strategies of the industry’s top retailers, such as Amazon, Walmart, Home Depot, Costco and others, all based off of Amazon’s own product assortment relative to other retailers in power drills, televisions and outdoor gear.

360pi analysis shows that Amazon lowered prices on power drills by 14% from Jan. 19 to April 9. Except for Jan. 16-23, when Home Depot claimed the lowest prices for power drills, Amazon maintained its lead in price competitiveness throughout January and April. In fact, Home Depot priced up to 5% below Amazon for nearly seven days, from Jan. 16-23, before Amazon reclaimed the lowest prices on power drills by performing its steepest short-term price drop of the season in the days following Jan. 23. On average, Wal-Mart followed Amazon’s lead closely, never pricing more than 5% higher than Amazon, and actually matching Amazon prices consistently throughout March.

Amazon also dropped prices on televisions by nearly 10% just before the Super Bowl, and then steadily increased prices by 15.5% from January 29 to April 9, jumping up right after the Super Bowl heading into the March Madness playoff season. Amazon was the most price-aggressive retailer in the category, causing retailers to appear as much as 22% higher priced than Amazon during January and February. From Jan. 2 to April 8, Costco maintained lower prices than Amazon 75.3% of the time, and at its best, Costco’s prices were up to 4% lower than Amazon.

“Weather isn’t the only thing that heats up in the spring and summer months — March Madness is the spring’s most popular sport, and baseball ramps up as we head into the summer,” said Jenn Markey, VP marketing at 360pi. “The fact that television prices appear to have increased just after the Super Bowl heading into March Madness may point to the theory that retailers believe they don’t have to create a need for people to buy televisions during popular televised sport months.”

According to the pricing data, Amazon appears to have set its sights on gaining market share in outdoor gear. In the outdoor SKUs that Amazon, Sears, Dicks Sporting Goods and Newegg have in common, Amazon has prices that were 23 to 40% lower than its competition. Walmart was also aggressive with its outdoor gear prices, as it was never more than 5% higher than Amazon in Amazon’s own assortment.

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REAL ESTATE

Starbucks expanding in Latin America

BY Marianne Wilson

Seattle — Starbucks Coffee Company is expanding its presence in Latin America, with plans to open locations in Colombia, Bolivia and Panama.

Starbucks said it is on track to open its first store in Colombia, in the city of Bogota, in mid-summer 2014 through a joint venture between two of its longest-term business partners in the Latin America region – Alsea and Grupo Nutresa. During the next five years, the joint venture plans to expand aggressively in Bogota and to other major cities in Colombia.

Later on in 2014, Delosi, Starbucks’ business partner in the Andean region, plans to open Starbucks first store in Bolivia, in the commercial center of Santa Cruz. Starbucks sees an opportunity to add up to 10 stores in Bolivia over the next several years.

In early 2015, Corporación de Franquicias Americanas, Starbucks’ Central America business partner, will open Starbucks first store in Panama. Over the long term, Starbucks and CFA plan to open more than 20 stores in Panama.

“We see significant opportunity to grow our retail presence beyond the more than 740 stores and 10,000 partners we currently have in 12 countries in the region in a way that will continue to celebrate the region’s rich coffee heritage while also deepening our relationships with each of the communities we serve,” said Cliff Burrows, group president, Starbucks Americas, U.S., and Teavana.

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News

Buc-ee’s streamlines POS with NCR solution

BY Dan Berthiaume

Jackson, Texas – Convenience store operator Buc-ee’s is using a complete software, hardware and services solution from NCR. The NCR solution is helping to streamline operations as well as increase speed and reliability at the point-of-sale.

Buc-ee’s operates 29 convenience centers throughout Texas. Prior to working with NCR, Buc-ee’s was experiencing system issues impacting their customer’s experience including uptime problems. The retailer’s legacy technology was unable to keep up with the volume causing operational challenges and unexpected financial expenses.

Buc-ee’s initially asked NCR to pilot its NCR Radiant Point-of-Sale (NCR RPOS) technology, fuel controller, and services capabilities in one of Buc-ee’s smaller footprint locations to prove their effectiveness within the retailer’s business model. Given the success with 64 fueling positions, Buc-ee’s has recently added a second fuel island, doubling the site’s capacity.

“Our goal is to not make the customer wait on us,” said Don Wasek, co-owner at Buc-ee’s. “What we have seen here by installing the NCR software solution is a dramatic improvement both inside, at the POS systems and outside at the island card readers. It’s a marked improvement over other transaction systems I’ve seen; especially with credit card processing, it’s blisteringly fast.”

In addition to providing hardware support services, NCR will also remotely monitor and troubleshoot locations, including remotely upgrading software when needed. This will further reduce Buc-cee’s total cost of ownership and increase availability.

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