July 16th isn’t a national holiday, but for the 100M+ Amazon Prime members, it’s on par with Black Friday. Deals galore that range from avocado peelers to zinc supplements in a shopping bonanza that now straddles 2 days in a 36 hour behemoth.
To take advantage of these deals, you must be an Amazon Prime member ($99 per year), and that magic ticket allows you deep discounts of 20-40% off savings.
Those participating in Amazon Prime day see significant sales increases, but as of Prime Day 2018, we want to take a special look at what these pricing pressures will do to a whole new category of business, traditional grocery stores.
Last June when Amazon announced the takeover of Whole Foods, it was too quick of a turnaround to get Whole Foods deals into Prime Day. Now with members able to walk into WF and enjoy discounts on Prime Day, both Amazon and WF can fight the nickname “Whole Paycheck,” a moniker bestowed to reflect the higher prices that some middle and lower class families face vs another retailer like WalMart.
The normal 10% discount already offered to shoppers who are Prime members will get even deeper, and that could spell trouble to traditional grocery stores. Last Prime day saw a record 12 minute delivery to a consumer, faster than driving to a store and checking out, and not even Kroger’s ClickList could beat that.
What this means to you
Great news! If you’re an Amazon Prime member, you get 36 hours worth of deals. If you are an investor, you have a few options. Look to see the net add on Amazon Prime members, as this is cash flow directly to Amazon’s bottom line. Make money on stock appreciation, options, and even saving on a $350 Vitamix blender.
If you are now bearish on traditional grocery stores, look into trading retail / consumer staple ETF’s such as FTXD, PMR, IBUY, and XRT.
Want to evaluate individual companies, look at Kroger (KR), WalMart (WMT), Target (TGT), Costco (COST), and Dollar General Corp (DG).