retail news in context, analysis with attitude

Time has a piece about the Amazon vs. Walmart throwdown, writing that "as online retail growth surpassed that of Walmart’s traditional retail model, a rivalry emerged between Walmart and Amazon, as price wars broke out. Today, Walmart’s revenue is still much larger–although only 5 times larger now–and Amazon’s revenue per employee ($623,000) is nearly three times that of Walmart.

"More noticeably, Amazon’s market cap this summer surpassed that of Walmart’s. Amazon is currently valued at $244 billion to its rival’s $206 billion. As much as that news was seen as evidence of Amazon’s unstoppable rise, it had just as much if not more to do with a slow decline Walmart has been trapped in."

Here's the passage that captures the competitive moment perfectly:

"It’s not just that Amazon is soaring this year while Walmart is sinking. It’s that one of them is a prized growth company and the other an aging, struggling giant that is paying billions a year in dividends to keep investors from selling. Put in retail terms, Amazon is the high-end product that people are willing to pay a crazy premium for, while Walmart is now something you might find in the bargain bin ... One is seen as a growth stock, the other as a value play that might be recovering in a couple of years. One is investing in new ambitious projects, the other in steady payouts to today’s shareholders. And of course, one has been rising while the other has been declining in recent months."
KC's View:
Which is not to say that Walmart is complacent. It is testing new and smaller formats, plowing tons of money into online, investing in higher wages and working hard to rehabilitate its sometimes questionable reputation.

But there is a sense, the story suggests, that Walmart is trying to address the issues of the past, while Amazon is addressing the issues of the future. It doesn't mean that both cannot survive, but "from an investment standpoint, these are two very different ventures."