In the Holiday Price Wars, Retailers Aren’t Even Trying to Keep Up With Amazon
Ella Chochrek
Assistant Digital Editor
As retailers begin rolling out discounts and promotions in the battle for holiday shoppers, one company’s prices are tough to match: Amazon.
According to a report by Profitero, the Seattle-based e-commerce site has the lowest prices among the major online “generalists,” specifically comparing prices to Walmart.com, Target.com and Jet.com.
Through an analysis of over 12,500 products across 16 categories, comparing exactly matched products, Profitero, an international firm supplying e-commerce performance analytics, determined that Amazon consistently won the pricing game.
On average, the e-tail behemoth’s prices were 4.1% lower than Walmart, 10.6% less than Target and 11.3% below Jet.
Across most categories — including beauty, pet supplies and pantry — specialty stores have prices far higher than Amazon’s, Profitero found. For example, Dick’s Sporting Goods charged an average of 22.9% more than Amazon in the sports and outdoor category. Profitero said this signals that speciality stores “appear to have entirely abandoned item-by-item price competition.”
With the holiday season fast approaching, Amazon is coming off a third-quarter earnings miss. The e-commerce giant posted earnings of $4.23 per diluted share, missing Wall Street’s predicted earnings of $4.62 per share. Revenue decreased to $2.1 billion, compared to $2.9 billion for the same period a year ago. This marked the first year-over-year decline in Amazon’s earnings since June 2017.
As it gears up for the holidays, Amazon is seeking to win over shoppers with one-day Prime shopping. The initiative is expected to cost $1.5 billion over the next quarter, according to CFO Brian Olsavsky.
Meanwhile, Walmart and Target have unveiled their own strategies aimed at nabbing a bigger slice of the holiday shopping pie. Walmart began its Black Friday discounts on Oct. 25, a week ahead of Halloween. Target is hiring more workers to meet demands — with plans to spend $50 million more on worker payments for Q4 this year than it did in 2018.
Overall, outside of the holiday shopping bonanza, many retailers have been moving away from relying on price-based competition, since deep discounting tends to hurt margins, and toward long-term strategies aimed at building consumer loyalty and boosting full-price sales. To this end, Target, Walmart and Amazon have all recently revamped or expanded their private label assortments, which tend to remove the pressure of price wars.
The National Retail Federation has predicted a solid rise in holiday spending for 2019. It forecasts an uptick of 3.8% to 4.2%, with overall retail sales increasing in the range of $727.9 billion to $730.7 billion.
Want more?
Run the Numbers: Nearly Half of Online Shoppers Will Only Buy on Sale This Season + More Holiday Stats
Why Sustainability Should Be Top of Mind for Retailers This Holiday Season
Is the Holiday Shopping Season Not as Important to Retailers as Years Past?
