retail news in context, analysis with attitude

Kantar Retail is out with a market basket analysis of Amazon's Prime Pantry service, which it has used as an alternative to Subscribe & Save, providing delivery of popular household and grocery essentials in regular sizes, as opposed to the large packs that it primarily has sold. (Products are shipped in boxes that are four cubic feet in size, holding up to 45 pounds, for a flat $5.99 fee.) The conclusion: Prime Pantry is not the threat to membership club stores that some believed it would be. "In comparing items available in club 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 says, also noting that "items cost an average of 25%–30% more on Pantry when compared to in-club items on a price-per-unit basis."

Prime Pantry's "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 study says.

Sara Al-Tukhaim, director of Retail Insights at Kantar says that Prime Pantry "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. Pantry's threat is more centered on the convenience of online and Prime membership growth than on its merchandising strategy."

However, the study also notes that "there is a strong overlap between club shoppers and Amazon Prime members. Kantar Retail ShopperScape® data reveals that 49% of club members have a Prime membership, and 24% of Prime members have a club membership."
KC's View:
The real problem with Prime Pantry, I believe, is that it really has been badly marketed. I'm a big Amazon shopper, and they've done almost nothing to bring me into the Prime Pantry fold, even as product availabilities in the Subscribe and Save service seem to be diminishing. I'm really surprised by that … it seems out of character, and not a sustainable way to grow sales and profits.