And now the price wars have begun! Amazon is celebrating its 20th anniversary today with an unprecedented Amazon Prime Day sale that sees products like a 32-inch TV going for $75 and Bose headphones for $80.
It’s not only an anniversary for Amazon, but also an attempt to gain more Prime members (you can only take advantage of the sales if you are a member) and spike sales in a slow retail summer where sales industry-wide were down in both May and June.
That’s all fine and dandy, as at least Amazon has reason to hold the sale because it can pin it on its anniversary. That makes it seem like a one-time event.
But that is hardly the case because other retailers are joining the fray with their own sales as a defensive strategy against Amazon. Walmart is discounting more than 2,000 items on its website today, while Best Buy will be holding a two-day sale later this month. Kohl’s and Target have been in the price-slashing mode as well.
These sales are not going away.
For consumers, this is a boom. But, as most of you can guess, this means that July 15 (smack dab in the middle of the calendar year) will become the summer equivalent of Black Friday. The sales are here to stay.
The problem for retailers is that these sales are purely reactionary, doing very little to help them gain preference among shoppers. In fact, they are teaching consumers to wait on purchasing because the summer Black Friday sale will become an annual event.
Sales like this have always been a tactic to get consumers into the store (or, in this case, to get them to log onto the website) but it’s strictly a short-term strategy.
It’s also a steep slope to long-term failure. Fighting on price is always a loser’s game unless you are Walmart (industry leader that owns low price) or Amazon (with its large inventory and online leadership).
For the rest, they will have taught consumers to only choose on price and not for what the value of offerings or because their brands are coveted.
No, sale numbers in August and September will plummet industry wide as consumers simply wait until the real holiday sales at the end of the year.
Then those retailers will wonder why their yearly sales figures were so low and what value they actually own. The answer is that today’s sales just mean that retailers are to be only chosen based on low prices. That’s the only value.