- Amazon, Walmart, and Target are thriving as dozens of other retailers close stores and file for bankruptcy.
- All three companies have benefited from the closure of ‘non-essential’ stores, as well as spikes in consumer spending on groceries and household goods.
- Amazon, Walmart, and Target are also well positioned to capture an increase in online spending, after years of massive investment in their e-commerce operations.
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The pandemic is driving record growth at Amazon, Walmart and Target, and solidifying their government over the retail landscape of America for years to come.
All three retailers reported blowout sales in the second quarter. Walmart’s digital sales nearly doubled from a year earlier and Target’s nearly doubled. The sales of the same companies of the companies climbed 9% and 10.9% respectively. Amazon’s total sales grew 40% in the quarter.
The companies’ strong performance comes against a backdrop of widespread pain and unusual turnaround in the U.S. retail sector.
More than a dozen major retailers have filed for bankruptcy by 2020, including J. Crew, Neiman Marcus, JCPenney, Brooks Brothers, and Tailored Brands, which owns Men’s Wearhouse and Jos. A. Bank. Vendors have also announced plans to close more than 6,300 stores this year.
Many of the retailers who are currently feeling the most pain are already struggling with the pandemic. The virus has only accelerated its deaths by bearing years of projected declines.
Meanwhile, America’s big boxes are booming amid the global health crisis.
When thousands of stores shut down at the start of the pandemic across the country, Amazon, Walmart, and Target were among the retailers that were considered “essential” and therefore able to continue. This means they benefit from several weeks of great shopping trips because consumers have stationery, food, cleaning products, and more.
Even when “non-essential” stores reopened, retailers continued to dominate.
At this point, shoppers continued to thank for food because they ate even more meals at home. They also began spending on goods for entertainment and work at home, such as bicycles, puzzles, home office supplies, patio furniture, and other household items.
A record share of consumer spending also shifted online as people tried to avoid going shopping.
Moody’s Analytics REIS, a commercial real estate-focused arm of Moody’s Analytics, estimates that the share of e-commerce spending relative to total retail sales increased from 11.4% at the end of 2019 to a historic 16.4% in the months of March and April only.
Amazon, Walmart, and Target were all in the best position to reap the benefits of this shift.
These companies have been focusing for years on building massive e-commerce networks that are capable of delivering hundreds of thousands of products quickly, cheaply and efficiently.
All three companies also had pick-up picks at stores, which became massively popular during the pandemic.
Target, for example, said online order pickup grew 60% in the second quarter, and drive-up pickup – in which Target employees deliver orders to customers’ cars in a store’s parking lot – went more than 700% ta.
Once consumers have chosen to visit stores, they seem to consolidate their journeys to reduce the risk of exposure to the virus. This has made stores with large boxes – which carry groceries along with an enormous selection of general merchandise – very handy.
Amid this, many consumers have recently received government incentive funds and some had extra money from canceled vacations, which generally boosted retail spending, according to Walmart and Target executives.
Taken together, these factors have helped make America’s largest retailers more powerful than ever, and were on the verge of winning the future of retail in the US.
