Amazon’s strategy of overtaking Walmart in key retail categories may finally come to fruition.
The competition between the world’s top two retailers for shares of consumer spend is fierce. Walmart currently dominates in the food and beverage category with an 18% share of consumer spend. On the other hand, Amazon has surged ahead in the share of consumer spend for more discretionary items such as electronics and appliances, where the eCommerce giant has overtaken sales as far back as 2015.
While gaining shares of consumer spend in all categories may be important, a few select categories may be more key to each retailer’s overall sales strategies. Health and personal care is one such category, which has become particularly competitive lately. PYMNTS research finds that 39% of consumers are highly likely to increase their online purchases of health and beauty products in the coming year. The potential loss of sales of these essential or near-essential items by brick-and-mortar locations to eCommerce rivals may already be working in Amazon’s favor. Proprietary PYMNTS research demonstrates Amazon’s gains in shares of spending compared to Walmart’s near-flat trajectory during the same period.
Similar to the gains in the share of electronics sales, Amazon’s incremental increase in market share for health and personal care began rising nearly a decade ago, growing from a 0.7% share in 2014 to its 5.4% share in Q2 2023. This rapid growth is why Morgan Stanley predicted in June that Amazon will maintain a 14.5% share in the health and beauty segments, outpacing Walmart’s projected 13% share.
Another central category to Walmart and Amazon’s share of consumer spend is clothing and accessories. For Walmart, this too is a near-essential item category — one it has been losing ground to Amazon since 2018. Amazon began 2019 with a nearly identical share of clothing and apparel sales. However, by the second quarter of 2023, Amazon widened this lead to more than double Walmart’s share.
Part of the reason behind Amazon’s strong growth in clothing and apparel comes from the company’s years-in-the-making focused efforts to gain segment share. In 2016, the company pivoted past its status as a third-party clothing and accessories seller by launching seven trademarked brands. Following this launch, Amazon made specific investments in higher-end labels and hired a head of fashion director who had held a nearly two-decade tenure at Vogue. Amazon has also partnered with social media influencers since 2019.
In 2020, Amazon expanded its focus on higher-end clothing and accessories labels, launching Luxury Stores, then featuring Oscar de la Renta and now including brands such as La Perla, Gucci, Fendi and Dior. The retailer is leaning into the resale trend by hosting Rent the Runway’s digital storefront. In 2022, Amazon also launched two brick-and-mortar clothing stores, dubbed Amazon Style, in Ohio and California.
For its part, Walmart is seeking to use innovation to gain back ground from Amazon’s current lead, with an eye on luring its target customer base, who are focused more on bargains than name brands. These include a virtual dressing room, launched in 2022 and updated a few months later, that allows users to “try on” items using their own photographs.
Past segment performance does not indicate future sales share health for either retailer. However, if these current trends continue, Amazon may be on track to overtake Walmart in nearly all categories.