Tis the season when the behemoths wage battle.
With the passing of Thanksgiving in the United States, the holiday shopping season kicks off with Walmart and Amazon going head to head. Billions of dollars in revenues are at stake. These two companies vie for supremacy while others struggle to simply hang on.
As the threat of recession looming, few know how things will unfold. Reports are the consumer is tapped in terms of discretionary spending. However, that tends not to stop people are they pull out the credit cards and swipe themselves further in debt.
For this reason, we can expect the shopping season to be fairly strong. Consumers might step their spending down but they will not stop. This is the case, at least in the United States. It appears as if people are incapable of not buying stuff.
This is something both Amazon and Walmart are well aware of. They realize that discounting can help to offset whatever struggles individual families might be having.
With the season expected to be somewhat subdued, it is imperative that companies do what they can to attract the eyeballs. This is something that Amazon traditionally excelled at. However, Walmart has been gaining steadily in recent years.
According to a report on CNBC, it seems that Walmart might be the one driving the show. The retailer is offering a higher percentage of discounts in an effort to lure in shoppers. This is showing up in some of the early numbers.
The big box retailer is dominating online searches for Black Friday discounts as of Friday morning, according to advertising technology company Captify, which tracks more than 1 billion searches a day from websites globally.
There is no guarantee this results in sales yet it is an indication of how the company is faring. Expect Walmart to do well.
Black Friday is expected to pull in $9 billion in online sales, a 1% jump from the previous year, according to Adobe.
Here we see another sign that things might not be as sluggish as some predict. If the first official day of the shopping season is successful, it could show the resiliency of the consumer. Much of Wall Street will be watching.
Walmart struck gold last quarter with a surprise, especially in light of other retailers. The numbers were strong leading some analysts to believe that the retail industry would do well.
This could be a misread of the market. Walmart is the largest grocer in the US, adding to its totals. Also, when people step down, they tend to leave Target and head to Walmart. The numbers of both companies show this trend.
We cannot discuss retail without including Amazon. Regardless of what is happening, the top online retailer is never far away.
The company has traditional had strong holiday seasons as it loaded up on discounts. Historically, the Amazon was willing to take losses for market share. There are certain items it holds strong on yet can pull in a lot of traffic with enticing offers. It appears Walmart is following this approach.
Another factor in this tends to be the demographics. Amazon has the tech friendly buyers. Walmarts customer base tends to be less educated, older, and less inclined to engage in online commerce. One advantage the company does have is an overwhelming percentage of the US population is within 30 minutes of a store.
That said, the latter has done a good job of increasing its online presence, translating into more sales. This is a trend it will likely look to leverage over the next month.
The final point of interest is going to be the fallout on the rest of the industry. If things are poor, those companies that were on edge to begin with could find themselves in a deeper hole. Store closings have been consistent over the last few years. Do not be surprised if many retailers are starting to look at continuing this trend after they get the holiday results.
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