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Where Walmart and Target are Closing the Gap with Amazon

Target and Walmart are competing for a hefty chunk of retail sales. There's one area where they are both outdoing Amazon.

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Target and Walmart are both gaining serious ground in the e-commerce warzone, and against their main opponent Amazon no less. Now, don’t take this to mean that the two companies are really stepping up to compete with Amazon on their level; but they’re managing to gain enough of a foothold that, unlike many other businesses, Amazon isn’t putting them out of business.

Moreover, Walmart and Target only have one real advantage over Amazon, so it isn’t like they are really making a comeback, but at least they’re holding their own in this one metric. That metric happens to be omni-channel strategies. In other words, more ways of serving the community. Both stores reported another quarter of excellent comparable sales growth, which is a combination of foot traffic, online sales, and the size of customer receipts, for 2019. Walmart had its best comps in nine years at 3.4%, and Target had 4.8% year-over-year.

Most of these gains are thanks to the stores’ advancement in the digital frontier of shopping. At one point they were far, far behind Amazon, and while they are still lagging behind, the disparity is not nearly so severe as it once was. Their internet retail strategies still make them several billion dollars a quarter, but this is well and truly nothing compared to the tens of billions that Amazon makes doing the same.

While the two of them are still a ways off from matching Amazon in the online realm, they are closing the gap inch by inch, and a big part of that is thanks to the one asset they really have to call on; their physical presence. Unlike Amazon, Target and Walmart both have a healthy physical brick and mortar presence, which they’ve been using to amp their online customer experience as well. Their real estate is an extension and expansion of their online presence, something known as omni-channel retail.

For example, Target CEO Brian Cornell stated that 80% of the quarter’s online sales were fulfilled in-store, either due to same day pickup or ship from store options. Walmart’s strategy is quite similar, even adding an option to order groceries online and pick them up in the store. Walmart has even recently announced to matching Amazon’s upcoming one-day shipping strategy for over 220,000 products.

On the opposing side, we of course have Amazon, whose physical presence almost entirely consists of roughly 500 Whole Foods stores. They haven’t grown too much since Amazon acquired them a few years ago. During their first quarter, Amazon reported that sales for physical stores were only up 1% after a 3% decline during the fourth quarter of 2018.

How Amazon will proceed from here is anyone’s guess; they may try to expand their physical presence by increasing the numbers of Whole Foods stores, or they could buy out another pre-existing physical chain, such as the floundering Kohl’s. Whether or not that will come to pass will only be seen after Amazon makes its move.