While smaller businesses struggle to compete with big-box retailers.
Big retailers’ grasp on consumers is only getting stronger, wrote the Wall Street Journal. The three biggest retailers by revenue in the U.S. are Costco, Walmart and Amazon, and they’re gaining customers from small businesses.
WSJ wrote: “Among some recent casualties are dollar stores, which industry analysts say are losing share to Walmart. The big-box retailer has drawn low-income consumers with a membership program that is half-price for those on government assistance.”
Amazon and Walmart’s fast-growing online sales—including those from third-party sellers—help them generate high-margin profit streams such as advertising and third-party fulfillment services, wrote WSJ. This in turn gives these retailers room to cut pricing to attract more customers.
During a December earnings call, Dollar General said it was testing out same-day home delivery from its stores—"a move that looks like an effort to play catch-up with Walmart,” said WSJ.
Pricing also plays an important role in consumers’ shifting behavior.
According to WSJ, in 2024, groceries at major supermarket chains were on average 21% more expensive than an equivalent basket at Walmart, while dollar store baskets were 9% higher than Walmart, according to a report from BofA Securities. More than a fifth of Walmart+ members use SNAP benefits, according to survey results from Evercore.
NACS Daily recently reported that “Shoppers and restaurant patrons in the U.S. were choosy about where and how to spend their money as they wrestled with high housing and food prices” in 2024. Research found that many customers “traded down to Walmart and Aldi. Diners opted for fast food or home cooking instead of sit-down restaurants.”
Comments