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How Bad Was Amazon Prime Day For Retail Foot Traffic?

"Amazon is clearly changing the game for brick and mortar retailers, and that the trend is only growing as the rise of smartphones and apps give consumers even more convenient ways to take advantage of promotions such as Prime Day," says Sense360 CEO Eli Portnoy.

Walmart, JCPenney, Macy’s, Barnes & Noble, Home Depot, Lowes, Sears, Kohl’s, Target and Best Buy all saw an average 24 percent decrease in traffic on Prime Day, according to data from mobile data analytics provider Sense360.

Retailers were already girding themselves for the third annual Prime Day, which kicked off the evening of July 10 through the 11th. Those dates represent Amazon’s own self-proclaimed “Black Friday” with the e-commerce giant promising “hundreds of thousands of deals” exclusively for members of the $99 annual (or $10 monthly) discount and delivery service with 30 hours of markdowns.

Some retailers’ brick-and-mortar locations did better than others, Sense360’s data found.

The three that performed “less poorly” amid Amazon’s promotion were Macy’s (-9 percent), Barnes & Noble (-11 percent) and Best Buy (-19 percent), according to Sense360’s analytics, which relies on mobile sensor technology and survey data from a panel of two million consumers across 20,000 U.S. locations,

For brands that are going through a particular period of struggle, Amazon Prime Day had a sharp impact. The top three retailers that performed the worst were Sears (which saw visits decline 36 percent), followed by JCPenny (-34 percent) and Kohl’s (-31 percent).

Source: Sense360

One additional factor that also may have had an impact on connected consumers: the role of the Amazon Echo voice-activated digital assistant Alexa.

In heralding this year’s Prime Day, Amazon singled out “voice shopping” with more “Alexa-exclusive deals” for members with an Amazon Echo, Echo Dot, Echo Show, Amazon Tap, compatible Fire TV or Fire tablet.

“Amazon is exclusively targeting its consumers who have an Alexa-enabled device, offering early-bird access to their Prime Day deals,” noted Dina Abdelrazik, Analyst, Parks Associates in an interview with GeoMarketing. “This will mark the second year that Amazon pushes ‘voice shopping’ with Alexa-exclusive deals.”

Its those connected consumers that Sense360 looked closely at. For its Amazon Prime Day study, the Los Angeles analytics company observed over 1.1 million anonymous consumer visits across the retail industry during seventeen consecutive Tuesdays beginning on March 7 to July 11, excluding the July 4 holiday.

People with the Amazon App installed saw a 32 percent decrease in traffic to all retailers.

People without the Amazon app decreased their traffic 7 percent to all retailers.

The top three retailers that fared the worst were Sears (-36 percent), JCPenny (-34 percent) and Kohl’s (-31 percent).

“Our data shows that Amazon is clearly changing the game for brick and mortar retailers, and that the trend is only growing as the rise of smartphones and apps give consumers even more convenient ways to take advantage of promotions such as Prime Day,” said Eli Portnoy, CEO and founder of Sense360. “With our ability to track anonymous consumer journeys, paired with survey insight into what drives these behaviors, retailers are able to get an invaluable understanding of the market enabling them to better strategize, plan and compete.”

GeoMarketing: In terms of the larger “Amazon effect” of “showrooming” on retailers, how should Prime Day be viewed in the wider context what what retailers face from the e-commerce brand? Was Prime Day a microcosm of what retailers experience everyday from the challenge? Or should Prime Day be seen as a special, separate event from what normally occurs?

Eli Portnoy: I think it is a bit of both. The “Amazon effect” is real and prevalent every day, but what is amazing about Prime Day is that Amazon has gotten so big that they are able to artificially create a day that draws so much business it actually hurts the competition.

Macy’s B&N, and Best Buy are generally seen as a retailers that are challenged when it comes to fully developing an omnichannel response to Amazon. Does their (relatively) stronger performance versus other established retailers suggest that they may have found a way to resist the challenge of Amazon?

This is such an interesting question. On the one hand, you’d expect B&N to most suffer anytime Amazon runs a sale because they are selling the same things. That said, what if Amazon has already so decimated those businesses and taken all of their casual customers, that the only ones they have left are the most loyal fans. Those that come to B&N regardless of price because they either live so close, hate Amazon, or for some other reason are just not price sensitive? In that case, maybe even with a huge sale it just doesn’t move them as much.

Is there anything else that retailers should take away from the Amazon Prime Day experience? Is it all about the convenience of 1-click purchasing (and deep discounts)? Or is there anything else retailers should focus on?

I think there is an element of pricing, but it also became a larger than life excuse to shop. Amazon did so much to promote Prime Day that they turned it into another Black Friday. Except, they are the only ones who get to participate.