Why Amazon’s Private Label Program Can Hurt C-stores
NATIONAL REPORT — Although convenience store retailers have largely been unaffected to date by the actions of ecommerce companies, this may be about to change.
Amazon Inc.’s planned private label grocery program could affect convenience store retailers more than any other retail channel, according to the findings of a new study fielded by Carbonview Research, sister company of Convenience Store News.
Amazon is rolling out an array of shelf-stable private label products, including nuts, spices, baby food, coffee, tea, vitamins, diapers and laundry detergent. Amazon has created brand names for these new private label products, such as Mama Bear, Happy Valley, Presto! and Wickedly Prime.
In Carbonview's study of 1,015 primary grocery shoppers, 44 percent of respondents said they would buy private label products less frequently from c-stores if products from Amazon’s private label program were offered to them. This compares to 41 percent of respondents who said they would buy less from drugstores, and 38 percent of respondents who would buy less from club stores, mass merchandise stores and grocery stores.
“Retailers will see lost sales to Amazon,” said Rich Ratcliff, senior vice president of Carbonview Research. “Millennials especially love Amazon.”
What's more, grocery shoppers expect Amazon’s private label products to be of higher quality than competitor private label products due to Amazon's strong brand name, he noted.
In addition, Amazon has a visionary CEO, Jeff Bezos, who isn’t afraid to fail at whatever endeavor he takes on. “Bezos loves to fail,” said Ratcliff. “He knows he will succeed at some point.”
Of the 1,015 primary grocery shoppers surveyed, 97 percent indicated they shop on Amazon’s website at least occasionally. Fifty-five percent of respondents are currently Amazon Prime members, with an additional 15 percent stating they expect to join the service in the next 12 months. Amazon Prime provides free two-day shipping and free video content among its membership benefits.
Broken down further, nearly two-thirds of millennial survey respondents (63 percent) are current Prime members, followed by 55 percent of those in Generation X and 45 percent of baby boomers.
THE POPULARITY OF PRIVATE LABEL
Carbonview’s study also examined consumers’ affinity for private label products. The research firm concluded that almost all respondents purchase such products at least occasionally. Only 2 percent of those surveyed said they never purchase a private label product.
Conversely, 80 percent of respondents said they purchase these products on occasion, while 18 percent buy private label products whenever available.
Millennials are more apt to purchase private label products, with more than one-quarter of the study participants in this age group (26 percent) indicating they will buy private label products whenever available.
For more findings, Carbonview is hosting a webinar on this topic July 14. Any retailer who has not already received an invitation can email Laura Nicklin at [email protected]. Those interested in obtaining the full report can also email Nicklin.