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Featured Jul 12, 2017 4 min read

Which retailers were in Prime position?

When Amazon's big $2 billion discounting day struck how did other retailers react? We check in on Prime Day strategy across the wider industry.

Chinese New Year

Supposing you went within three feet of the internet yesterday, you’ll know it was Amazon Prime Day.

The discounting event, in its third year, ran for 30 hours this time around. That’s a helluva lot of #deals.  

Given Amazon’s fashion interest, apparel retailers were watching this year’s deal frenzy closer than ever.

In the six week build-up to the July 4 weekend, discounting in the US was rife: we saw a 33% increase year-on-year impacting tops, accessories and footwear categories most.  

That pattern continued through the July 4 weekend itself, discounts were up by 32%. And we’re not talking a light sprinkling of 20% off. Discounting ran deep: more than half of the reductions were by more than 50% off.  

Despite those large slashes, sell outs were down by 15% over the July 4 weekend, which implies either retailers had deeper stock levels of their discounted wares, or the reductions just didn’t resonate with consumers.  

With Prime Day falling a week out from July 4, you might think that retailers would use the event to add more product to their sales.

And yet…

..when Prime Day struck, the majority of retailers ran in the opposite direction, bucking last year’s trend.  

There were 62% fewer discounts on 10-11th compared to the day before and day of Prime last year.

Notable exclusions from the big discounters were Walmart (who made a tenth of the number of discounts over the two days compared to last year), Target and Lord & Taylor, all scaling back dramatically compared to last year.  

Retailers, perhaps knowing eyeballs would be seeking deals, not full price wares, even cut back on their newness in the five days leading up to Prime Day by 16.5% compared to last year.

Rather than be enticed into competitive tactics, it appears that apparel retailers in the most part took a pause to observe Prime from a safe distance.  

When Prime Day struck, the majority of retailers held fast, bucking last year’s trend.  

Why retailers don’t need to be involved in Prime

The motivation behind Amazon’s Prime Day is different from other retail price slashes. Prime Day is a marketing vehicle to drive membership. Apparel reductions on the other hand should be about clearing product mishaps, over-stocked trends and highly seasonal items.  

Amazon are able to drive serious hype for Prime Day through their electronics, like Echo. With a portfolio of private label brands, Amazon are now able to offer similar discounts in the fashion category.

However, given the evidence in industry headlines, we’d dissuade any retailer from manufacturing for discount. It’s not a good experience for your customer and it will diminish the position of your brand.

Retail peer pressure to discount has done this industry serious damage, so it’s heartening to see many retailers taking a decision to give Prime Day a wide berth. Discounting is only strategic if it benefits your trading position, otherwise it’s simply caving under pressure.  

Discounting is only strategic if it benefits trading position. If not, it’s caving under pressure.

Not everyone shied away

Of course, there are some who went in guns ablaze. Multi-brand retailers with a wide assortment and online focus are those that could be harmed most by Amazon’s fashion ambitions. So it follows, that they’re the ones who did roll out the discounting red carpet.

Macy’s ‘Black Friday in July’ week-long discounts will run until July 17, with a discount code for an extra 25% off. More than half of its offering is already reduced, by an average 48% off. Does that make product free? Not quite.

JC Penney launched its “Cyber in July” event which runs until the end of today, also with an extra 30% off.

These events feel right if and when product reductions are on summer stock – it needs clearing anyway. That’s how Kohl’s approached the event, with 30% off summer stock. It fits in well with the retail calendar and limits the fallout for brand relationships.

Nordstrom has its annual sale on July 13 and have been touting early access for Nordstrom card holders. Its full price online sales lifted 28% last weekend compared to last year.  

Overall, occasion dresses, swim, summer footwear and activewear discounts worked well for retailers in the last few days, leading to the highest number of sell outs. Tops, bottoms and accessories were the most discounted categories.

Opportune tactics

Then there are the chancers. A number of retailers used their digital marketing smarts to cash in on Prime Day attention without launching a full assault.

How? By sneaking the word ‘prime’ into their own email newsletters in the last few days, knowing that shoppers searching their inboxes for deals will stumble upon their own products. That included Lane Bryant, DSW and Woman Within.  

Lane Bryant included “You might say it’s a prime time to start shopping these deals” in the preview text of its newsletter on July 10, and included the word ‘prime’ in the subject line of another newsletter on July 11.  

It’s so simple, that it’s verging on genius.

Resist pressure, build strategy

More now than ever before, apparel brands and retailers need to define what it is they do uniquely for their own customers and the way they deliver that experience seamlessly.

Informed decisions need to be made through that lens. And don’t do this blindly. Use every tool at your disposal to have clarity of your market, its product trends and consumers’ behaviour.

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