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Kantar Retail: Amazon Prime Pantry is no club killer

BY Michael Johnsen

BOSTON — Kantar Retail’s recent analysis of Amazon Prime Pantry confirms that its merchandising approach, unique business model and pricing strategy have little in common with clubs and that the new program does not pose a direct threat to clubs today, the firm announced Wednesday. 
 
"Prime Pantry is not the club killer that’s been hyped in the headlines," said Sara Al-Tukhaim, director of Retail Insights, and contributor to the study. "It cannot leverage the physical space that the clubs use to offer members the biggest pack sizes available at the lowest prices. And, clubs are able to further differentiate their products with unique private-label offers and in-club experiences that keep members coming back," she said. "Pantry's threat is more centered on the convenience of online and Prime membership growth than on its merchandising strategy." 
 
 
Nevertheless, there is a strong overlap between club shoppers and Amazon Prime members. Kantar Retail ShopperScape data found that 49% of club members have a Prime membership, and 24% of Prime members have a club membership. "So, while not directly competitive, both Amazon Prime and clubs appeal to a similar type of shopper. It remains to be seen if these dual members will view the two retailer membership models as complementary or will move to one to meet their evolving needs," Anne Zybowski, VP of Retail Insights, noted.
 
Kantar Retail’s evaluation of price across the three retailers reveals that Costco’s business model, which is built on harnessing the power of the membership fee, and the efficiencies of its operating model resulted in the lowest price-per-unit in the market. In comparing items available in clubs with those on Prime Pantry, Costco beats Pantry on a price-per-unit for all but two items — 93% of the basket — and Sam's Club was not far behind. The study also found that items cost an average of 25% to 30% more on Pantry when compared to in-club items on a price-per-unit basis.
 
As a result of its differing assortment strategies, Pantry pricing is competitive to the overall market but can’t match the value delivered through the efficiencies of the club model. "While Prime Pantry is certainly not the club killer it has been made out to be, it is still one of many emerging 'stock-up' options to which club suppliers should be attuned," noted Al-Tukhaim.
 
To assess how Prime Pantry fares in the shifting landscape, Kantar Retail conducted a basket-pricing study by visiting a Sam’s Club and a Costco in New England in August 2014. Prime Pantry items were also pulled on the same day. Fifty-eight items across a variety of consumables categories were examined in the study.
 
 

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Amazon.com launches Amazon Echo by invitation only

BY Michael Johnsen

 

 
 
SEATTLE — Amazon.com on Thursday posted a YouTube video announcing the launch of Amazon Echo, a plug-in device designed to provide information, music, news and weather. And there will be additional features to come as Echo automatically updates through the cloud with new services.
 
The device will retail for $199, though Amazon Prime members will save $100 for a limited time. In addition, the device is not for sale generally. Those interested need to request an invitation on Amazon's site

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WSJ: Obamacare unlikely to be repealed in its entirety

BY Michael Johnsen

NEW YORK – Although the GOP controls both houses, it is unlikely that they will be able to repeal Obamacare, according to an article in the Wall Street Journal published Wednesday
 
Instead, legislators will be seeking to repeal pieces of the Affordable Care Act, those pieces that are "deeply, deeply unpopular with the American people.”
 
"[Sen. Mitch McConnell, R-Ky.] cited the law’s tax on medical devices, its requirement that big employers provide insurance to all workers clocking 30 hours a week or more or pay a fee, and its mandate that most Americans carry insurance or pay a fee," the WSJ noted. 

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