Don’t dethrone Walmart so fast

Print Friendly, PDF & Email

How important, as a gauge of success in retailing, is volume?

Not sales, in the traditional sense, but volume, as in annual volume or quarterly volume or weekly volume.

To those who follow retail performance, it can be extremely important as a barometer of success. Certainly a retailer whose annual volume is counted in the billions of dollars is more successful than a competitor whose volume barely approaches $1 billion.

Or is it?

Among the current preoccupations of those gurus who profess to understand retailing, an obsession now centers on the battle between Walmart and Amazon. More specifically, the question at hand is this obvious one: Who is bigger?

A recent story on the front page of the Business section of The New York Times posed this intriguing, if somewhat misleading, headline: “People Now Spend More at Amazon Than Walmart.” The story went on to amplify that statement, arguing that in the 12 months than ended in June shoppers spent over $610 billion on the Amazon site. By contrast, during the 12 months that ended in July customers spent ONLY [letters in caps have been added by the editorial writer] $566 billion. Conclusion: Amazon has now passed Walmart, becoming the world’s largest retailer.

Our conclusion: So what? Does it really matter? Is Amazon now a larger — and, by implication a more important retailer (outside China) than Walmart?

The Times story sets out to make a case for the proposition by arguing that the emergence of Amazon as No. 1 is indicative of the “shift from brick-and-mortar to online shopping that has changed how people buy everything from Teddy Grahams to teddy bears.”

That, in essence, is the point of the Times’ story, which goes on to announce that “in racing past Walmart, Amazon has dethroned one of the most successful — and feared — companies of recent decades. Walmart perfected a thriving big-box model of retailing that squeezed every possible penny out of its cost, which drove down prices and vanquished competitors.” Today, however, is a new day. The internet has become king. And no retailer is better equipped to take advantage of it than Amazon.

That, is essence, is the Times’ story, and the newspaper of record spend the better part of two pages attempting to justify its conclusion, with much of that space devoted to demonstrating the new invincibility of Amazon. “The Big Bad Wolf is Amazon now,” the paper quotes Wharton School professor Barbara Kahn as saying, giving her opinion credence by citing the fact that she has “written several books on ­retailing.”

That’s all well and good. But before we close the book on Walmart’s remarkable 59-year history, we need to ask this question: Is there anyone in the brick-and-mortar retailing community who seriously believes that Amazon, simply by virtue of higher volume, is a more important, and more necessary, member of the retailing community than Walmart?

We at MMR don’t think so either. Fact is, Walmart today is more successful, a more prosperous, more meaningful and more impactful member of the retailing community than it has ever been. Once upon a time, it was a one-trick retailer, offering consumers everyday-low prices — and little else. Today, it presents itself, successfully, as a consummate purveyor of retail goods, the place consumers congregate, competitors study and suppliers scramble to for access and ­exposure.

Beyond that, Walmart has made its competitors better, more efficient, more successful and more powerful. The brick-and-mortar retailing community has learned, through trial and error, how to compete with Walmart. In the process, that community has leveled the retail playing field and made retailing a more exciting and competitive business.

Now that community, sufficiently alerted, is about to turn its considerable prowess and much-honed expertise to the online component of the retail equation — and to Amazon, the momentary king of the hill.



You must be logged in to post a comment Login