What Consumers’ Wallets Say about the Walmart-Amazon War

A battle is being waged over who will own the largest share of the consumer shopping cart.

Following the explosion of news surrounding Amazon and Whole Foods Market joining forces, media quickly picked up the threads of this battle royale: Wal-Mart Stores Inc. versus Amazon. The opposing forces are well matched: Walmart, the world's largest retailer, and Amazon, the world's largest ecommerce company, both vying for the title of king of the consumer shopping cart.  

Over the past few years, Walmart has been working hard to beef up its ecommerce offerings by buying purely digital companies such as Jet.com, Shoebuy, ModCloth and Moosejaw. It also recently purchased Bonobos, a very popular online clothing company. In fact, the Bentonville, Ark.-based retailer believes that it will see about a 40 percent increase in ecommerce sales in the United States next fiscal year.

Walmart’s online focus and expansion have largely been overshadowed by Amazon's $13.7 billion acquisition of Whole Foods – a purchase that seems to show intent to make a more concerted play in the brick-and-mortar retail space, and also enhance its Amazon Fresh, Prime Now, Prime Pantry, Amazon Go and Amazon Fresh Pickup offerings.

With 56 percent of Walmart revenue coming from food and grocery – which is also a significant portion of a consumer’s monthly budget – the mega-retailer doesn’t want to lose this market share. In fact, many see Amazon’s move as a clear shot directly at Walmart: Amazon has wanted a piece of the food and grocery business for a long time, as it has continued to grapple with how to change an industry that hasn’t undergone significant change in generations.

The move, overall, has Walmart scrambling even faster to gear up for war. According to a recent USA Today article, Walmart – in additional to beefing up its online offerings – is attempting to make grocery shopping more convenient by delivering groceries to customers and even testing a service that will put cold items directly in the customer's refrigerator.

At my market research firm, we specialize in the shopper experience. Our background in understanding consumer purchasing behavior sheds light on this most recent retail war. Consumers are looking for a multifaceted solution that brings the best of online and retail solutions together to deliver convenience, speed and value. Consumers’ expectations of retailers are at an all-time high, and when an experience doesn’t meet these expectations, consumers vote with their wallets.

Technology has made it easier for consumers to have their lofty expectations fulfilled. With a few key strokes, they can quickly find the best value and services available, and with these drivers at their back, shoppers are looking for immediate satisfaction. They're accustomed to getting this online, and they want this to extend to grocery. Both Seattle-based Amazon and Walmart are seeking to capitalize on this behavior through an integrated set of offerings that meet consumers where they are and where their preferences lie.

In short, the Amazon-Whole Foods deal and Walmart’s move toward ecommerce and convenience are positioned to meet current consumer behaviors. Through our research, we’ve explored some of the drivers behind these behaviors, such as:

  • Shopper context and priorities: The age of information means that consumers can find out just about anything – including where to shop. Transparency and easy access to information are critical. Retailers must give their shoppers instant access to the information – and products – that they need so they don’t find it elsewhere.

  • Expectation economy: The rapid pace of innovation is unprecedented, and consumers have an expectation that they will meet with ease and convenience in every aspect of their lives – travel, taxis, appointment booking, social interactions – and grocery shopping.

  • Digital native habits: The powerful Millennial and Gen Y shoppers are affecting brands and other consumer groups, as they are demanding value and a truly customer-centric shopping experience. They are asking for brands have to deliver something beyond themselves and their product. They also have to advance the life of their consumer and create a meaningful connection.

Both Amazon and Walmart are attempting to meet these needs through recent business moves. Both understand the importance of having both an online and physical presence to fill the customer's purchasing context. Both understand the demand for value and convenience. While our overall shopping experiences – in both the brick-and-mortar and online spaces – will change in the future, it will continue to be driven by consumer needs and demands – and promises to become more and more seamless.

About the Author

Phil Dance

Phil Dance is a partner with, and co-founder of, Alter Agents, a Los Angeles-based market research firm. He has more than 15 years of experience researching and uncovering shopper insights.

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