Walmart and Amazon’s Retail Tug-of-War Now Focused on AI

This week, Amazon increased its investments in artificial intelligence, as the eCommerce giant and rival Walmart adopt new technologies to remain competitive.

Amazon’s $1 billion Industrial Innovation Fund is ramping up investments in companies that combine AI and robotics this year to boost efficiency throughout its logistical network, Franziska Bossart, head of the corporate venture capital arm, said.

Among the 12 investments the company has already made is one in Mantis Robotics, a company building a robotic arm that works alongside humans. Amazon has also pledged up to $4 billion to generative AI startup Anthropic.

Additionally, the company is tapping new AI capabilities to grow its revenue through its B2B offerings. Amazon Bedrock, the eCommerce company’s service to make foundation models both from its own teams and external AI startups available for businesses to use, announced Friday (Feb. 23) that it will add models from Mistral AI to its offerings. The AI startup provides generative AI designed to excel in tasks such as text summarization, structuration, question answering and code completion.

Meanwhile, Walmart is using AI to boost efficiency in stores, cutting labor costs at its Sam’s Club subsidiary, as Sam’s Club President and CEO Chris Nicholas told analysts on the retailer’s earnings call last week. The warehouse club chain is using computer vision to cut out the step where an employee needs to check self-service customers’ receipts at the door.

Walmart as a whole is using AI across its business.

“We’re very excited about generative AI,” Walmart CEO Doug McMillon told analysts on the call. “There are big opportunities for us to improve the customer member experience, improve associate experiences and productivity and to help take costs out of the business.”

He noted that the company has already been using the technology to improve its search functionality, enabling smart recommendations when consumers input phrases such as “help me buy a Valentine’s Day gift.”

Consumers are engaging with these kinds of AI tools. PYMNTS Intelligence’s report from November, “AI-Enabled Payments Enhance Customer Options,” revealed that most consumers engage in AI-related activities weekly. Eighty-four percent search online, 52% use a navigation app or device and 52% receive product recommendations online. Plus, 1 in 3 consumers said AI technologies are very or extremely prominent in their daily personal activities.

These AI upgrades come as Amazon and Walmart compete to win U.S. consumers’ retail spending, standing above the competition. The November edition of PYMNTS’ “Whole Paycheck Report” series, “Amazon Extends Its Lead Over Walmart in Retail Spend,” which drew on earnings reports and data from the U.S. Census Bureau and Bureau of Economic Analysis to estimate each retail giant’s market share, found that Amazon captured 8.2% of U.S. consumer retail spend in Q3 2023, while Walmart snagged 7.2%.

Amazon and Walmart’s ongoing investments in AI signal not just a commitment to remaining competitive but also an understanding of the role the technology plays in shaping the future of commerce.

For all PYMNTS retail and AI coverage, subscribe to the daily Retail and AI Newsletters.