New research by Impact Analytics looks at correlations between Prime Day promotions and Black Friday deals on the horizon this holiday season
LINTHICUM HEIGHTS, MD / ACCESSWIRE / July 26, 2022 / A confluence of economic conditions resulted in some of the steepest discounts ever seen on Amazon Prime Day this year. Impact Analytics took a deep dive into the data, which indicates there’s reason to believe that trend will continue with this year’s Black Friday shopping season.
This year’s Prime Day coincided with the highest levels of inflation we’ve seen in 40 years. The U.S. inflation rate in June climbed to a whopping 9.1%, driven in large part by spikes in fuel costs, food prices, and housing costs. As prices have shot up across the board, American consumers are feeling the pinch and, as a result, are less willing to part with any discretionary income they may have.
Amazon responded to these widespread financial concerns by offering some of the most generous discounts ever offered on Prime Day since its 2015 inception. As a result of these deep discounts, estimates suggest the average Prime Day order value actually increased by 16-17% over last year.
In product categories like Amazon-branded products (Alexa, Kindle, Ring, etc.), smart wearables, small consumer durables/appliances, consumer electronics, and home improvement goods, discounts were double those seen during Prime Days between 2019-2021. This includes discounts increasing as much as 10-20% across the top product categories versus what we saw during Prime Day 2021.
For the past few years, Impact Analytics has been closely tracking pricing and promotional information across major retailers and brands. Our analysis has revealed a clear correlation between promotional intensity (average discount depth) between Amazon Prime Day sales and the Black Friday shopping season that follows it.
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For instance, deals in the small appliance category during Prime Day 2019 were approximately 7-10% lower than their historical average and 5-10% higher in 2020. Looking at those years’ corresponding Black Friday sales, deals were approximately 5-7% lower in 2019 and 5-7% higher in 2020 than their historical averages.
As we head into the 2022 holiday season, the U.S. economy is still on shaky ground. Consumer prices have made the cost of living higher, which is putting downward pressure on consumer confidence. Inflation has weakened purchasing power, and threats of a looming recession have forced consumers to alter their spending behavior to ensure they can afford necessities. This, coupled with a glut of merchandise in the warehouses of most major consumer brands following two years of supply chain woes, indicates retailers will be offering steep markdowns this holiday season in an effort to move merchandise.
Americans are cautiously watching their spending this year and so are less likely to make a purchase unless they’re given a compelling reason to do so. Anticipating this reality, Amazon offered Prime Day discounts nearly twice as deep as during the previous three years and was able to parlay those discounts into a successful Prime Day 2022 against tall odds.
In order to find similar success this holiday season, retailers must ensure their forecasting engines take the whole complex set of internal and external variables into consideration to drive key decisions around everything from replenishment and allocation to discount depths and lengths of promotions. Retailers looking to profit this holiday season must gear up early and invest in the right infrastructure to help them accurately predict demand and meet inflation-weary consumers’ expectations around pricing.
The full study is available on the Impact Analytics website.
SOURCE: Impact Analytics
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