Amazon’s Private Label a Threat to C-Stores: Study

Kristina Peters, Associate Editor, CSP

private-label package

OAKBROOK TERRACE, Ill. -- When it comes to Amazon’s private-label products, convenience stores have the most to lose, according to a study by Carbonview Research.

Carbonview, Deerfield, Ill., surveyed 1,015 shoppers to find out just how much Amazon will affect the retail industry.  

Amazon began its first broad push into perishable private-label foods at the end of June, rolling out whole-bean and ground coffee under its new Happy Belly label and bottles of baby food under the Mama Bear name, The Wall Street Journal reported.

The availability of these private-label products, however, puts pressure on the c-store industry: Forty-four percent of shoppers surveyed by Carbonview indicated they would shop at convenience stores less. Likewise, 41% said they would purchase from drug stores less and 38% would buy from club, mass and grocery channels less.

“It’s pretty obvious why [c-stores] would take a larger hit. It’s basically price, selection and the environment not necessarily being conducive to larger basket sizes,” said Rich Ratcliff, senior vice president of Carbonview, during the webinar, “Amazon to Begin Offering Private-Label Consumable Goods: What Does This Mean for You.”

There is good news, too, though ..

Mariano's grocery store

“Amazon Prime is in the virtual world. They won’t know your current customers the way you do,” Ratcliff said.

One way retailers can gain ground is by offering their customers an experience they can’t get through Amazon.

“Our research has shown that shoppers will actually go out of their way to go to a store that offers an unique and engaging experience,” Ratcliff said. “This might mean offering more gourmet products; it may mean you are offering some experiential features that [are] unrelated to shopping that no other store in the area offers.”

Ratcliff points to Mariano’s. The grocery chain has set the standard for fresh food and products and created an environment that “allows for people to enjoy their experience there,” he said. 

private label vs. brand

Amazon's private-label rollout also has the potential to boost consumer perception of private labels in general.

While perceptions of private label have improved, they still lag perceptions of brand-name products in terms of quality (46% vs. 68%, respectively), trustworthiness (53% vs. 63%) and innovation (29% vs. 45%), according to the Carbonview study.

Amazon could change that. Consumer perception of Amazon’s private label is already beating out brand names in trustworthiness (69%) and innovation (56%). 

“[Consumers are] really going to be looking at the product. Does the product do what it says it’s going to do?” Ratcliff said. “Whether it’s a product that you consume, a product that you wear or a product that you use at your home, it’s going to be much more about how that product delivers … its value to the consumer.”

And private labels already win in terms of value for the money at 76%, vs. 68% for Amazon and 34% for brand names, the study said.

Amazon Prime boxes

“The retail industry and many other industries are always watching what happens with Amazon. When they decide to move toward a new innovation or a new technology, we all discover a path that we need to understand more,” Ratcliff said.

And that’s because Amazon has positioned itself as a pioneer in the retail space, offering its Prime members the convenience of two-day delivery on a surplus of products.

“Their products and services really seem to glue our lives together,” Ratcliff said. “They immediately come out with products that we wonder how we could have lived without them, and it’s because of that that we really need to look at how we run our businesses moving forward when it comes to retail.”