Competitive battle between Amazon and Walmart reshaping the retail landscape
Walmart, the world's largest retailer, is expanding its business horizons beyond its core retail operations. The company is making significant strides in technology, supply chain innovation, and strategic market expansions, as well as venturing into experiential marketing through sports partnerships.
- Technology and AI Investments
Walmart is investing heavily in advanced technology to improve its online business and operational efficiency. Four AI-powered "super agents" with autonomous decision-making capabilities have been introduced to enhance various business functions, reflecting Walmart's drive to innovate in e-commerce and back-office processes.
- Supply Chain Innovation
Walmart's latest venture is a state-of-the-art case-ready beef processing facility in Olathe, Kansas. This 300,000+ square foot plant focuses on packaging and distributing Angus beef cuts sourced regionally, significantly expanding Walmart’s vertically integrated supply chain and creating hundreds of jobs.
- Global Market Moves and Divestments
Walmart has sold its remaining stake in Seiyu Co., a Japanese supermarket chain, and is pursuing strategic market expansions elsewhere, such as in India and China, through partnerships and acquisitions aiming at e-commerce and technology growth.
- Sports Partnerships for Marketing Expansion
Walmart has signed a multi-year partnership with Major League Soccer (MLS) and Leagues Cup, aiming to enhance fan engagement in soccer across North America. This partnership goes beyond traditional retail by activating Walmart’s brand in stadiums and digital platforms, offering immersive fan experiences tied to major sporting events.
These initiatives demonstrate Walmart broadening its business scope by embedding technology deeply across operations, innovating supply chains, strategically reshaping its global retail footprint, and venturing into experiential marketing through sports partnerships. These expansions complement its core retail business and help diversify revenue streams and customer engagement channels.
Tim Derdenger, an associate professor of marketing and strategy at Carnegie Mellon University, emphasised the importance of an effective team to gather data and market research for creating an effective ecosystem. However, Jon Reily, president of Dentsu Commerce, noted that the financial sustainability of this strategy remains to be seen and may not pay off soon.
Reily also mentioned that this strategy allows retailers to insulate themselves from economic woes affecting the industry. Meanwhile, Meyar Sheik, Kibo's chief commerce officer and Certona founder, advised smaller retailers to focus on valuing their customer base and understanding their needs rather than replicating strategies of Amazon or Walmart.
A recent survey from Forrester showed that only a few brands can anticipate and effectively respond to their customers' needs, suggesting a challenging landscape for retailers seeking to diversify their operations. Amazon, for instance, derives over 59.1% of its operating income from its cloud computing business, Amazon Web Services.
As Walmart and Amazon continue to diversify, smaller retailers may follow suit, leading to a dynamic and evolving retail landscape.
- Policy and Regulatory Considerations Governing bodies will need to evaluate the implications of these expanding business models on existing policies, particularly in relation to competition, data privacy, and labor laws.
- AI and Health Concerns Given the rise of AI within retail, health experts may raise concerns about privacy, data security, and potential biases in decision-making processes, especially as more personal information is collected and analyzed.
- Economic Impact and War The escalating economic rivalry between global retail giants may lead to unintended consequences, such as trade tensions and potential conflicts, impacting the stability of the global economy.
- AI and Space Exploration AI advancements could have significant implications for space exploration, enabling automation in tasks like orbiting satellites, analyzing data, and coordinating space missions to save time and resources for the industry.
- Research Direction in Finance Financial researchers might focus on understanding the profitability projections and risks associated with diversified business strategies, helping institutions make informed decisions on investing in this ever-changing retail landscape.
- Law and Business Liability Lawyers and business consultants may need to draft or reevaluate contracts, agreements, and insurance policies to accommodate new business models and mitigate potential liabilities.
- AI and Government Spending Government agencies may adopt AI to streamline operations, such as improving social services delivery, procurement, and tax collection processes, while also fostering innovation in the public sector.
- TV and Marketing Entertainment industries could potentially benefit from collaborations with retailers, providing them opportunities for product placement and cross-promotions on popular TV shows and streaming platforms.
- Investing and Future Markets As retail evolves, so will the strategies of investors who may seek to penetrate emerging markets and invest in businesses that cater to changing consumer preferences and behaviors shaped by technological advancements.
