Amazon vs Walmart Weekly: Was Q2 the Bottom or the Beginning?

The past three months of runaway inflation, rising interest rates, worries about the war in Europe and the gloomy bear market at home may not have been branded with a fitting nickname yet but they surely will never be forgotten — especially by the nation’s two largest retailers or the millions of struggling customers they serve each day.

Where past named eras that characterized different phases of volatility and difficulty, such as The Dot Com Bubble or The Great Recession, highlighted a particular problem at a particular point in time, the current nameless malaise not only involves many more ingredients but has a unique global impact to it where no part of the world is exempt from the downdraft

In short, it is a war with four fronts that has both consumers, businesses and retailers battling a mix of rising prices, high borrowing costs, challenging supply chain issues and a broad-based economic slowdown all at once.

By one measure, the past 90 days alone have seen the market value of Walmart and Amazon decline by roughly 20% and 30% respectively, leaving the latter with a $1 trillion valuation down from a peak price tag of nearly $1.7 trillion as recently as October.

But like all multinational operations, the leadership of the two retail titans have no choice but to react and play in the actual environment at hand, rather than the one they wished for, or thought might be coming out of two insane years of pandemic-related stress and change.

For Amazon CEO Andy Jassy, who will mark his first anniversary in the top job next week and had hoped for an invisible transition and continuation from the Jeff Bezos era, it’s fair to say the past 12 months have not gone to plan and have left him in a predicament the likes of which his predecessor never saw.

“I remain very optimistic about our Stores business and believe we’re still in the early days of what’s possible,” Jassy wrote 10 days ago in a letter to employees announcing the promotion of Doug Herrington as the CEO of Amazon’s Worldwide Stores business.

In the face of his slumping stock and amidst the ongoing fight in the four-fronted war, Jassy — who, like Bezos, does not appear on earnings calls — pointed out that Amazon still only had about a 1% share of the worldwide retail market, 85% of which, he said, is still being done inside physical stores.

“If you believe that equation will change over time (which I do), there’s *a lot* of potential for us as we continue to be laser-focused on providing the best customer experience (broadest selection, low prices, fast and convenient delivery) while working on our cost structure to have the right long-term business,” Jassy concluded.

While no one doubt the long-term viability of Amazon or Walmart, navigating the next few months, or even quarters, looks set to be a challenge fit for the ages, as well as an appropriately ominous and still-to-be-determined nickname.

The Tech Train

Amid this backdrop, the recent stream of tech innovations from both retailers continued this week, a span that also saw another reminder that the financial stress level of consumers, as measured by the growing prevalence of paycheck-to-paycheck status, was showing no signs of abating.

Among the noteworthy technological advances rolled out, include Walmart’s second purchase of a virtual reality business in the past year, this time buying in eyeglass-fitting startup Memomi to its stable in a move aimed at boosting both consumer convenience and the retail giant’s portfolio of healthcare services.

At the same time, the e-commerce leader announced that it was going to begin selling in-store shopping data to brands that it gathers from its touchless shopping location at its Amazon Fresh grocery and Amazon Go convenience store locations the use its Just Walk Out technology.

While those are only the latest digital endeavors, they surely will not be the last, as the two rivals gear up for a long hot July, that will include Prime Day in less than two weeks, followed by Amazon’s second-quarter earnings report at the end of the month.