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Supply Chain News: Walmart Largely Losing the Non-Grocery Retail Wars to Amazon



A Grocery Store with Merchandise, not a Mass Merchant with Groceries

Feb. 28, 2023
SCDigest Editorial Staff

Some very interesting analysis this week from the 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...


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, 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%.


Any reaction to these Walmart numbers? Let us know your thoughts at the Feedback section below.








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