Amazon will overtake Walmart as the No. 1 retailer in 24 years; The latter is a store-based tack

Amazon is expected to overtake Walmart as the No. 1 retailer in the United States by 2024, according to a new report from Essential. This news is hardly surprising to retail observers, since Walmart bet on a store-based approach a few years ago. Although understandable at the time, consumers have changed their habits – and Walmart is going to pay the price.

The Mammoth Company – which today is not only the largest retailer in the United States but the largest in any category – had very little choice at the time. With its massive revenue from its 4,735 brick-and-mortar stores, e-commerce was seen as a way to increase that revenue, but it was never replaced. (Worldwide, Walmart operates 10,585 stores today and employs approximately 2.3 million affiliates.)

Retailers often see e-commerce as an advantage for existing customers, with minimal effort to reach out. In contrast to the approach with Amazon, which took a completely opposite tack. Despite buying whole food grocery chains as well as launching dozens of Amazon Go stores, Amazon still sees physical stores as a thought. Its business model is built around online shopping.

Over the past 10 years or so, American consumers have been slowly adopting more and more e-commerce each year – a trend that only accelerated when the Covid-19 epidemic hit in 2020. Research firm Statista found that the e-commerce share of U.S. retail sales grew from 5.8% in 2013 to 16.1% today – and is projected to reach 21.9% by 2025. As a result of the epidemic, the percentage of retail sales from online shopping increased from 11.1% in 2019 to 14.2% in 2020 – the highest recent year-over-year percentage increase.

“As the growth of online retailers is accelerated by the epidemic, Amazon will continue to grow the fastest in the top 10 with a CAGR of 11.7% between 2021-2026,” the Essentials report said, adding that Amazon is expected to add $ 294. Billions of sales in the five-year period ending in 2026, surpassing Walmart as the largest retailer on the market.

Essential predicts that the top three retailers in the United States will be Amazon, Walmart and Costco, with 14.9%, 12.7% and 4.4% market share, respectively.

In recent years, the term “iteler” has gone out of fashion, as the distinction between online and in-store sales fades into irrelevance. But not so with Amazon and Walmart. For very different reasons, they keep those differences beautiful and distinct.

Although they live in parallel universes, both retailers use stores and online in completely opposite ways. Walmart uses online to strengthen its store position. Amazon uses in-store strategies to strengthen its online apps and sites. Amazon Go locations are less about generating enough revenue and more about showcasing the technology that makes shopping non-friction. And Whole Foods is where many Amazon shoppers can go to return items purchased online.

To put it bluntly, dropping a slot to become the second largest retailer in the United States is not a disaster at all. Walmart’s real estate footprint in the United States and its overall operations worldwide means it’s not going anywhere for an incredibly long time.

But the change makes it clear that Amazon is not just a market leader, it is setting the tone for e-commerce operations everywhere.

Copyright © 2022 IDG Communications, Inc.

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