Among many of today’s consumers, retailer loyalty extends only as far as conveniently and cost-effectively getting the best price on the product they want. The retailer that meets that need wins the sale. Via this thesis, why can’t today’s Amazon loyalist be tomorrow’s Walmart loyalist?
Analysis provided in Walmart U.S. Strategies and Shoppers helps make a strong case in Walmart’s favor. Omni-channel commerce, demographics, geography, assortment breadth, and brand expansion are converging to widen the customer target beyond the company’s already massive usage footprint. And against the backdrop of these changes, Walmart’s pricing is as competitive as ever. All that needs to happen is for the uninitiated to give the retailer a try.
- Among more affluent shoppers, this has already begun to happen. While Walmart has historically relied disproportionately on lower-income consumers, its e-commerce sales skew toward more affluent households. Walmart is also carrying more and more upscale brands—providing touchpoints with upscale targets.
- Walmart is also gaining on Amazon’s product assortment leadership. By blending in-store product offerings with an aggressively expanding assortment of online items, Walmart can meet a greater variety of need states across retail categories.
The problem inherent in converting the Amazon loyalist is that Amazon is clearly not just a retailer. Amazon has developed a consumer engagement ecosystem that not only meets retail shopping needs across an endless sea of items over an increasing deeper and wider set of categories but also meets a slew of other leisure and entertainment needs via a host of related services, even while its Alexa virtual assistant and its army of gadgetry weaves itself further into the fabric of the home.
Walmart (and other major competitors such as Target) are layering in services and features that chip away at the power of Prime, among them 2-day free shipping, click-and-collect, and subscription services. But more fully competing against Amazon will likely require establishing major technology partnerships with Amazon competitors. In Google and Microsoft, it has likely chosen well.
But make no mistake, demographic change is in the wind. Two years from now, will millions of affluent shoppers who previously would not have considered shopping at a Walmart location be interacting with the brand? Signs point to yes. This puts Amazon’s core audience at risk.
-- by David Morris, senior consultant