Business Insider – Retail – The pandemic is ramping up the war between Amazon, Walmart, and Target, and making them more powerful than everEstimated Reading Time: just 3 min

As reported on Business Insider – Retail:

Amazon, Walmart, and Target are thriving while dozens of other retailers are closing stores and filing for bankruptcy.
All three companies have benefitted from the closures of "non-essential" stores, as well as spikes in consumer spending on groceries and household goods. 
Amazon, Walmart, and Target have also been well positioned to capture a surge in spending online, following years of massive investments in their e-commerce operations.
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The pandemic is fueling record growth at Amazon, Walmart, and Target, and solidifying their reign over America’s retail landscape for years to come.

All three retailers reported blowout sales in the second quarter. Walmart’s digital sales nearly doubled from a year earlier and Target’s nearly tripled. The companies’ same-store sales climbed 9% and 10.9%, respectively. Amazon’s overall sales grew 40% in the quarter.

The companies’ strong performance comes against a backdrop of widespread pain and unprecedented upheaval in the US retail industry.

More than a dozen major retailers have filed for bankruptcy so far in 2020, including J. Crew, Neiman Marcus, JCPenney, Brooks Brothers, and Tailored Brands, which owns Men’s Wearhouse and Jos. A. Bank. Retailers have also announced plans to close more than 6,300 stores this year.

Many of the retailers that are feeling the most pain right now were already struggling before the pandemic. The virus has only quickened their demise by carrying forward years of projected declines.

Meanwhile, America’s big-box titans are thriving amid the global health crisis.

As thousands of stores shut down across the country at the start of the pandemic, Amazon, Walmart, and Target were among the retailers deemed "essential" and therefore able to continue operating. This means they benefitted from several weeks of big stock-up trips, as consumers stockpiled paper goods, food, cleaning products, and more.

Even as "non-essential" stores reopened, big-box retailers continued to dominate. 

At this point, shoppers continued to stock up on food because they were still eating more meals at home. They also started spending on goods for entertaining and working at home, such as bicycles, puzzles, home-office supplies, patio furniture, and other household items.

A record share of consumer spending shifted online, as well, as people tried to avoid going into stores at all.

Moody’s Analytics REIS, a commercial real estate-focused arm of Moody’s Analytics, estimates that the share of e-commerce spending relative to total retail sales increased from 11.4% at the end of 2019 to a historic 16.4% in the months of March and April alone.

Amazon, Walmart, and Target were all best positioned to reap the benefits of this shift.

These companies have been focused for years on building out massive e-commerce networks capable of shipping hundreds of thousands of products to consumers quickly, cheaply, and efficiently. 

All three companies also had established curbside pickup from stores, which has become massively popular during the pandemic. 

Target, for example, said in-store pickup of online orders grew 60% in the second quarter, and drive-up pickup — in which Target employees deliver orders to customers’ cars in a store parking lot — surged more than 700%. 

When consumers have chosen to visit stores, they appear to be consolidating their trips to reduce risk of exposure to the virus. This has made big-box stores — which carry groceries along with a huge selection of general merchandise — highly convenient.

Amid all this, many consumers recently received government stimulus funds and some had extra money from canceled vacations, which boosted retail spending overall, according to the chief executives of Walmart and Target. 

Taken together, these factors have helped make America’s biggest retailers more powerful than ever, and poised to win the future of retail in the US.
SEE ALSO: Demand for warehouse space is surging as historic online spending exposes a major weakness

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Source: Business Insider – Retail
Author: Hayley Peterson
Date: 2020 08 23

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