T Nation

Retail "Nuclear War"


I don’t know if you guys have been watching this play out…but it is simply fascinating.

“Wal-Mart” and “Amazon” are in an all-out, no-holes-barred, war to see who will ultimately have online, retail dominance. While Amazon still is no where close to Wal-Mart in terms of profitability…they are way ahead of them in terms of online infrastructure and distribution.

But Wal-Mart is catching up with it’s aggressive on-line acquisitions.

Why “Nuclear War”? While we as consumers are benefiting (in terms of cost)…retailers are being blown away by the blast caused by these two. (When I was growing up, I never could have perceived names like Sears and, JC Penny…or that whole sectors like Book Stores and Record Stores would go the way of the Mastodon in less than a Generation).

One last thing before I get you guys thoughts…while Wal-Mart is the retailer the World “Loves to Hate”…they are some aggressive Som’ Bitches who don’t wait for the fight to come to them. (Just went there this morning for batteries…which were more than half of what they were at my local grocer). And at least 90% of most of my shopping now (besides grocery) occurs on Amazon.


(And let the “Wal-Mart Hate” begin!)


It is certainly fascinating how fast the entire landscape is changing (and not only in retail). I have shopped at Walmart only a handful of times, mostly because I do not care for the large super-stores outside of Costco (I know where everything is). And I’ve never really cared for their website.

But as for Amazon, we’ve had periods where the UPS truck is delivering packages 3 - 4 times per week. I love it: the sheer quantity of items they carry, the reviews, return policy, Subscribe-n-Save. They completely upended the market and show no signs of stopping. (I am, however, not wild about their Prime video functionality).

Locally, I’ve been seeing shuttered superstores like Kmart and Sears turned into churches, office space and, most recently, those kids jump/trampoline centers (took my son to a birthday party there a few months ago). It’s especially interesting to see the local mall try to reinvent itself to hold onto their retailers. Ours now has a luxury movie theater with a bar, full menu, etc.


WOW, T! I forgot about malls!

I think the only thing keeping these things open are the Food Courts and Athletic Shoe Retailers. (By the way…I have “funny feet” where I may wear one size with a certain shoe and another with another shoe. Shoes are about the only thing that I won’t buy online).

There are some pretty big anchors hanging in there…but I think that it’s just a matter of time. (One local one just lost their JC Penny).

It is some expensive space (malls) to maintain. They either get creative or most won’t be around long.


It’s interesting the way Amazon makes small vendors follow the product catalogue so they can collect data on every single item sold through the marketplace.

Once a SKU or product class has enough volume on it Amazon goes around the small vendor and strikes a deal with the supplier. Amazon basically has the small vendors doing the marketing research for them.

Our Wal-Mart just got the order online and pickup option for groceries. It’s free, not like other grocery stores. So now the wife can price check and punch in an order and say “stop by Wal-Mart at 5pm”. I show up and get my stuff without ever stepping in that store and dealing with their employees. Game changer.

They wouldn’t have done that without Amazon’s market disruption. If Amazon figures out how to deliver groceries… look out.


They already are in select cities (San Fran and Seattle maybe?). I was in a supply chain class where we did a case study on it.

They are also doing grocery pick up in Seattle similar to what was described above with Wal-Mart.

I think it’ll only work for big cities with high population density, but its definitely a game changer if they can get it work.


Glad that this is happening, competition between these two giants means lower prices for customers which is great.


Another game changer…and a huge one…that they are both starting to do…

It used to be prohibitive to buys small items here and there online (like toiletries, etc.)…the shipping was often more than the cost of the item.

No more.

Both offer small “shopping bags” (I think Amazon’s is called “The Prime Pantry” or something? I haven’t used it…) where you can put a number of small items is a “shopping box” and have it delivered to you.


For the ultra frugal it still seems like warehouse stores like Costco and discount stores like Aldi are better for groceries.

But damn if the UPS truck doesn’t stop by several times a week from Amazon. It’s to the point where I go:
“what the hell did we buy now?”
"Oh, that’s alot less than we paid at ______ "


And not just by a cent or two.

I mentioned to you guys the batteries.

The grocer I spoke about had Duracells (I needed to change out all my alarm batteries, so I needed a fair number) SINGLE packs that were almost twice as much as a Wal-Mart eight pack.


Not sure I’d go that far:


If Wal-Mart continues to successfully pivot away from brick and mortar to e-commerce (or as their ratio of physical v. e-commerce shifts) Amazon will struggle. Alibaba is going to cut into Amazon’s profits as well.

Imo, the biggest issue with Amazon is their high stock price. I think it’ll be difficult for them to generate the necessary capital to maintain their market position. If Wal-Mart can find a way to shift away from the higher cost of running physical stores without taking large losses they’re actually in a very good position to basically take what Amazon pioneered right out from under them.

The retail landscape really is getting interesting.


Interestingly, as Wal-Mart shifts to e-commerce, Amazon shifts to brick and mortar. This picture is from Seattle.

Also, I have two Amazon Locker locations in my city. Basically I can ship to a locker, and pick it up there…

I have something shipping to my house, from Amazon, at least once a week. I recently spent $10 more to have amazon ship it to my house, than drive to Wal-Mart to pick up the exact same thing.


I don’t know if that will go over too well. I might not be the best example, but I like to inspect my food before I buy it. Whether its steaks or mangoes or anything else, I have to see and feel that type of stuff before I decide its something I want. Especially meat products. I can just grab a pack of steaks and keep moving.

I also get weirded out when I cook a burger and it doesn’t change color inside. Those box-o-burgers are the worst.

Dried and standardized bulk goods would probably be fine though. Sugar, rice, flour, etc.


I think this is a good point that will ultimately stall the delivery of groceries. Hell when I go shopping now 1/3 the produce isn’t something I would ever buy. All it will take is one guy getting some old food and he wouldn’t use the food delivery anymore. And higher quality control would shred the already razor thin margins of groceries.


Selectivity is the ultimate pitfall imho. Odd thing though- I buy the stuff no one else will, especially the produce. The stuff on the verge of turning is the best for shakes. You haven’t lived until you’ve had a brown banana yogurt smoothie. A little squirt of hersheys syrup in there and you’re in heaven.


Absolutely, the dynamic is crazy right now. What’s probably more interesting, at least to me, is how poorly Barnes & Nobles has performed over the few years and now Amazon is building brick and mortar bookstores. Very interesting indeed.


They are doing it differently (at least from what I’ve read, haven’t experienced one myself). My understanding is that every item has a barcode you can scan to be able to read amazon reviews just like you would online. I think initially they wouldn’t even list prices, you HAD to scan the item to see the price and information. Prime membership has a discount, as well as recognize your buying trend for recommendations. It puts the “big data” into brick and mortar, which is interesting and fun to see.


Very cool. I’ve never seen or been to one either. This is the first I’ve heard of it. I’m in publishing so it’s really interesting for me to see.


They’re still only feeling it out. First store in Seattle and only a total of 5ish stores across the US. They have a LONGGGGG way to go to be anywhere close to what Barnes and Noble was/is.


Ya, I’d honestly be surprised if they went that direction, but we’ll see I guess.


Actually, this is current trend - the retail battle has already been won by Amazon/Alibaba/Walmart/whomever comes next and it’s just a matter of time.

The only physical purchases that will survive will be what the industry calls “experiences” - going into a physical store and buying a grass fed beef steak from an “artisan butcher”, hand picking a mango from an “artisan grocer” and so on.

So in short, today’s mundane activity such as buying a steak will be tomorrow’s premium overcharged privileged experience.