Some very interesting analysis this week from the PYMTS.com web site on the battle for retail sales leadership between giants Walmart and Amazon.
The bottom line: Walmart is losing in terms of on-line sales and retail sales in categories outside of grocery – and can’t yet seem to be able to stop the slide.
Supply Chain Digest Says...
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| That is why Walmart recognizes that grabbing more retail sales is “significantly more important than remaining the country’s largest grocery store.” |
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We learn from PYMTS that groceries represent about 56.9% of overall Walmart sales, up slightly from 55.9% in 2019, probably due in part to rapid grocery prices inflation.
Amazon and other retailers have taken away share in other non-grocery categories that were once strategic drivers of sales and margin for Walmart, such as health and beauty.
Walmart still leads in this category, with about 6% market share – but that percentage has remained flat since 2019. Meanwhile, over that same period, PYMTS says, Amazon’s share of the category has grown from 2.5% to 5.1% in 2022, and will surely pass Walmart in the next year or so.
As a result of all this and more, “Walmart is starting to look like a giant grocery store that also sells retail products instead of a mass merchant that also sells groceries,” PYMTS says.
As another example, PYMTS calculates that in apparel Amazon’s 8% share is now twice that of Walmart, a sales gap that has grown from 0.8% in 2019 to 6.4% currently.
The core problem PYMTS suggests: Walmart doesn’t seem to be able to convert enough of the 100 or 120 million US shoppers who walk into a Walmart store each week into customers who walk out with much more than food in their carts.
In 2016, Walmart made a $3.3 billion purchase of then high-flying etailer Jet.com, but the unit was shuttered four years later after failing to drive appreciable on-line sales for Walmart.
“The company has failed to make any meaningful on-line traction before or since,” PYMTS says.
Meanwhile, Amazon “has made on-line checkout conversion an art form,” helping it to gain share of non-grocery retail sales.
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 We also found this very interesting: PYMTS says an amazing 87% of Walmart+ members also belong to Amazon Prime. Meanwhile, PYMNTS data finds the percentage of consumers who only have a Walmart+ subscription is just in the low single digits.
Of course, Amazon continues to leverage its free next day or same day delivery for Prime members. With a delivery network it claims now almost equal to that of UPS.
“It seems that a price-sensitive consumer is also now a time-sensitive consumer, as more of them return to part-time or full-time travel to work as well as shuttling kids to after-school and weekend activities,” PYMTS says, adding “It’s likely that ordering on-line and free shipping has now become an ‘essential service.’”
PYMTS says that more than 40% of grocery items are now purchased on-line, even though 60% of consumers still walk into a grocery store on a weekly basis.
That is why Walmart recognizes that grabbing more retail sales is “significantly more important than remaining the country’s largest grocery store.”
We offer a couple of more interesting points from PYMTS:
Dry goods will increasingly become commodities, bought on-line and delivered same day, next day or at an agreed upon replenishment schedule.
In parallel, going to the grocery store will likely become a different experience, with stores focused on fresh fruits, veggies, meats, cheeses and baked, in much smaller footprints.
Finally, Amazon now accounts for 8.8% of US consumer retail spend, compared to Walmart’s 7.3%, with 4% of overall consumer spend to Walmart’s 3.1%.
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