Amazon Grabs 16.2% of Clothing Sales, Leaving Walmart Behind

While the narrative of Amazon’s ascendance in discretionary spending and Walmart’s grip on grocery sales dominates the retail conversation, a closer examination of the latest PYMNTS Intelligence report, “Tale of Two Shoppers: Amazon for Discretionary Spending, Walmart for Groceries and Basics,” reveals nuanced shifts in consumer behavior and market share that hold implications for both banking and retail sectors.

The report underscores the diverging trajectories of the two retail giants, with Amazon capitalizing on a surge in discretionary purchases to boost its overall market share, while Walmart’s growth remains largely tethered to essential goods. This not only shapes the competition but also offers insights into consumer spending patterns and the importance of eCommerce vs. brick-and-mortar strategies.

The analysis, based on earnings reports from 2019 through Q4 2024 and national data from the U.S. Census Bureau and Bureau of Economic Analysis, paints a picture of Amazon’s strategic gains in capturing a larger slice of the overall U.S. retail spending, a market valued at $625 trillion as of end-January.

Amazon’s fourth-quarter surge in 2024 saw its share of total U.S. retail spending jump to 10.7%, a 25% increase from the previous quarter. In contrast, Walmart’s retail market share remained consistent throughout 2024, with its fourth-quarter performance mirroring the rest of the year at around 7.4% of consumer retail spending.

The report highlights the growing consumer preference for convenience-driven purchasing, a factor that appears to favor Amazon’s frictionless online experience and Prime membership benefits.

Getting beyond these top-line findings reveals several intriguing trends:

Amazon’s Quiet Inroads Into Grocery: Despite Walmart’s continued dominance in food, Amazon has made a “meaningful boost” in this category, capturing 2.7% of the total U.S. market in 2024, up from 2.3% the previous year. This slow but steady growth suggests a gradual erosion of Walmart’s core strength.

The eCommerce Divide: eCommerce was the engine of Amazon’s growth, accounting for 86% of its total sales in 2024, which reached $733.2 billion. Conversely, less than 5% of Walmart’s $559.1 billion in total U.S. retail sales came from online channels. This stark difference underscores the fundamental strategies of the two retailers.

Holiday Spending Skews Toward Amazon: Amazon’s Q4 growth in consumer spending has been consistent, increasing from 6% in Q4 2019 to 9.9% in Q4 2023 and reaching 10.7% in Q4 2024. Walmart, however, did not experience a similar holiday-driven spike, indicating a divergence in where consumers allocate their seasonal spending.

The report also indicates that Amazon’s market share gains are not limited to just a few discretionary categories. In the last three months of 2024, Amazon accounted for 3 out of 10 purchases of all electronics and appliances.

Even in health and beauty, a category traditionally strong for Walmart, Amazon’s share has steadily increased to match Walmart’s at 6.8% in 2024, even surpassing it in the fourth quarter. In clothing and apparel, Amazon’s lead is even more pronounced, capturing 16.2% of spending in 2024 compared to Walmart’s declining share of 6.4%.

These granular data points highlight a broader shift in consumer preference toward Amazon across a wider range of retail segments, posing a challenge for Walmart to adapt beyond its brick-and-mortar strengths and grocery-centric identity. Walmart itself has acknowledged potential headwinds, forecasting a deceleration in net sales growth for its new fiscal year.