Traditional brick and mortar retailers Walmart and Target are beating online retail giant Amazon on Wall Street.
Over the last twelve months, Walmart’s and Target’s shares are up 14.16% and 12.73% respectively, while Amazon’s shares are up 6.03%.
That’s a big difference from the previous years, when Amazon’s shares were beating the traditional retailers’ shares by a huge margin.
Walmart, Target, and Amazon Shares in the last Twelve MonthsKoyfin
Walmart, Target, and Amazon Shares in the last Five YearsKoyfin
This change in the fortunes of the three retailers on Wall Street may come as a surprise to business strategists and investment analysts who were ready to write off traditional retailers.
But apparently, something has changed in the retailing industry.
Instead of going away, traditional retailing has come back to supplement and reinforce on-line retailing. Shoppers are ordering online and are picking up merchandise at neighborhood stores, saving time and avoiding shipping fees.
That’s especially the case for groceries, where speed of delivery is a crucial factor in maintaining freshness.
The merging of online retailing with traditional retailing has given an advantage to retailers with a large neighborhood store presence like Walmart and Target. The two retailers have reported a rebound in both online sales and retail sales.
“It’s no longer a secret that you need a strong brick-and-mortar operation to accompany your online strength,” says Haris Anwar, Senior Analyst at the global financial platform Investing.com. “The 40% growth rate in Walmart and Target online sales over the past several quarters are a good indication that these old retail companies have found a way to achieve that winning mix.”
Walmart, Target, and Amazon Revenues in the last Five YearsKoyfin
Simply put, Walmart and Target have changed the game in the retailing industry. And they have brought Amazon back into the world of the neighborhood store it once sought to abolish. “If Amazon wants to snatch a major portion of $840 billion grocery market, it has to create a model where its strong e-commerce capabilities supplement a physical store network,” says Anwar. “Amazon’s retail ambitions will not be fulfilled unless its expands its physical presence.“
In fact, Amazon seems to have been doing just that, with the acquisition of Whole Foods, according to Anwar. “The Whole Food acquisition was part of this strategy to accelerate its learning and then come up with a strategy to disrupt the retail market,” he says. That strategy? Opening up more grocery stores around the country to cater to markets not served by Whole Foods, as recently announced.
While it’s too early to say whether Amazon’s new strategy will work, one thing is clear. Walmart and Target have “turned the tables” on Amazon. Now, the on-line giant will have to play catch-up with the traditional retailers both on Wall Street and Main Street.