Amazon (NASDAQ:AMZN) has launched new grocery discounts for Prime members at Amazon Fresh and unveiled a private-label brand named Amazon Saver. This initiative, aimed at making grocery shopping more affordable, includes savings of up to 50% on various rotating items and features products priced under $5. The company’s recent strategies signify a robust effort to enhance its footprint in the grocery sector, which is currently dominated by Walmart.
Amazon’s grocery initiatives have been evolving over the years, with previous efforts focusing on integrating Whole Foods Market and offering delivery services. These steps align with the current strategy, but the addition of significant discounts and a new budget-friendly private label marks a notable shift. Historically, Amazon has lagged behind Walmart in grocery sales, and these new measures appear to be a direct response to close that gap.
Similarly, Amazon’s recent push into third-party grocery delivery services in Seattle and expanded partnerships on the East Coast reflect its broader strategy to diversify and strengthen its grocery offerings. By increasing accessibility and affordability, Amazon aims to attract a larger share of the grocery market, a domain where it has seen slower growth compared to its other retail sectors.
New Discount Campaign
The new campaign greatly expands the exclusive Prime savings program at Amazon Fresh, offering discounts of up to 50% on eight to 15 rotating items. These items include fresh produce and pantry staples, both in-store and online. Claire Peters, worldwide vice president of Amazon Fresh, stated,
“We’re always looking to make grocery shopping easier, faster and more affordable for our customers.”
Introduction of Amazon Saver
Amazon Saver, the new private-label brand, joins existing labels like Amazon Kitchen and 365 by Whole Foods Market. This brand is described as “no-frills,” with most items priced under $5, making it a cost-effective option for consumers. This move comes as Amazon intensifies its presence in the third-party grocery delivery market, partnering with local merchants like Metropolitan Market in Seattle and expanding its collaboration with Weis Markets on the East Coast.
Amazon’s efforts to grow its grocery business are a response to its current standings, where Walmart maintains a significant lead in market share. Recent reports indicate Walmart holds a 20% share in consumer grocery spending, while Amazon trails with 2.7%. The expansion of discounts and introduction of new private-label products underscores Amazon’s strategy to enhance customer appeal and compete more effectively in the grocery sector.
Understanding consumer behavior is crucial. As noted by industry experts, there is a shift towards value-based shopping due to economic pressures. Younger generations, in particular, are more inclined to experiment with different brands and products, rather than adhering strictly to brand loyalty. This evolving consumer mindset aligns with Amazon’s introduction of value-oriented offerings like Amazon Saver.
Amazon’s latest initiatives reflect a strategic approach to capturing a larger share of the grocery market by offering significant discounts and budget-friendly options. These efforts are part of a broader plan to compete more aggressively with established grocery leaders like Walmart. By focusing on affordability and expanding its delivery services, Amazon aims to attract a diverse customer base and strengthen its position in the retail market.
