Why Amazon Prime Day may have ruined the Golden Quarter for UK retailers

In mid-August, four months and 10 days before Christmas day, John Lewis launched its online Christmas shop in direct response to “hundreds of emails from shoppers”.

While it may have got the jump on its department store rival Selfridges for the earliest UK Christmas shop this year, it was just one of many retailers bracing itself for the looming chaos of “mega peak” season, set to be the longest and strangest holiday shopping period in modern history.

The coveted ‘Golden Quarter’, like almost everything in 2020, is poised to be radically different from anything retailers have experienced before, forcing them to contend with social distancing, dramatic fluctuations in disposable income, huge peaks in online orders and a wildly unpredictable schedule.

For years, Black Friday has been the emblematic starting pistol for discount season, helping retailers kickstart their busiest and most important season with a manic day of discounts. However, just like Selfridges, this year it’s been beaten to the punch.

Amazon Prime Day, usually held in mid-July, was delayed no less than three times until October 13 sparking what is expected to be a vastly extended discounting period.

“The delay of Prime Day, ranked by Amazon shoppers as the most important moment for buying products, from its traditional July date to mid-October, has undeniably influenced consumer priorities and well as brand strategy for the quarter,” Amazon agency Molzi’s founder Chris Mole told Charged.

“Twenty-six per cent of shoppers admitted that the delay has made them less likely to wait for Black Friday to purchase Christmas gifts, instead favouring Prime Day.”

READ MORE: Amazon kick-starts Black Friday deals a month ahead of time

According to a recent study by Wunderman Thompson Commerce, Amazon Prime Day will set off a period of heavy discounting that will last over 10 weeks.

The study predicted that this would dramatically eat into Black Friday sales, seeing them drop 22 per cent compared to 2019.

Subsequent research from Adobe suggested that ‘Cyber Week’ should now be considered ‘Cyber Month’, seeing online sales from the start of November through to December 3 top $2 billion every day in the US.

While a longer than usual period of increased sales may sound like a bonus for retailers, this disruption could also have a widespread and serious negative impact.

The shut down of non-essential retail in the UK from March to June and subsequent dramatic loss of footfall has put the vast majority of retailers, especially those reliant on bricks-and-mortar stores, on the back foot ever since.

According to Forbes Burton’s managing director Rick Smith, this means they simply will not be able to afford to offer discounts which will keep them competitive.

“We’re likely to see one of the most competitive years for spending in the Golden Quarter”, he explained.

“As we’re expecting it to be a big year for online spending, it’s likely that we’ll see retailers offering bigger and longer sales than in previous years in an attempt to capitalise on the times, especially on the high street.

“Smaller retailers have already been struggling with keeping their doors open for the past few months, so it’s unlikely that they’ll be able to offer the same deals as larger retailers who can afford to discount popular products without a big impact on their bottom line.”

READ MORE: Online retail sales will top $2bn every day in November as ‘Cyber Week’ becomes ‘Cyber Month’

Not only can they simply not afford to match the discounts offered by online giants like Amazon on Prime Day, but the disruption means they likely don’t have the stock to do so either.

Delivery expert Sorted’s chief executive David Grimes explained: “It’s not going to be a race to the bottom price-wise, but make no mistake, discounting products will be more prevalent this year than any other as consumer spending is squeezed and retailers look to shift the backlog of stock that has been created.

“I anticipate less choice for consumers, with retailers focusing on popular brands and products to ensure they can provide stock.”

While retailers have endured one of the harshest financial years in recent history, the pandemic has also decimated many shoppers’ budgets.

Record job losses across many sectors have decimated disposable incomes, but the continued uncertainty over government handouts, subsidies, furlough schemes and lockdown measures, mean millions more are reluctant to spend big this Christmas

Capgemini Invent’s senior manager Christopher Baird explained that: “Even those people who were fortunate enough to keep their jobs are likely to be wary of going overboard with their spending, given the uncertainty caused by the changing circumstances that we all continue to face.

“In the UK, I can see Black Friday passing by with less fanfare than it has done in the past.”

Despite this new wave of spending caution, Mole argues that those who have managed to keep their jobs and save money by reducing spend on things like travel and eating out, may see ‘Cyber Month’ as an opportunity to splurge.

“Alongside this, some consumers have reduced their outgoings during lockdown and view Q4 sales as an opportunity to spend those savings,” he said.

“With Brexit and the new Digital Services Tax coming into place next year likely to increase Amazon prices, consumers are hoping to take advantage of the deals in 2020 before these changes are implemented.

“Prime Day may be the priority for consumers, but the next few months are set to be the biggest period ever for ecommerce sales.”

In any other year spreading the chaos of Black Friday, Cyber Monday and Christmas out over some 10 weeks, with record spending predicted across the majority of days would be a Godsend for the retail sector.

Yet this year it poses to be yet another threat to contend with in order to survive, a threat forced upon retailers who have struggled most by those who have doubled their profits.

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