Within the U.S. retail industry, by far the biggest names are Walmart and Amazon. However, these are big names for very different reasons. Walmart is at the top because of their brick-and-mortar presence in thousands of U.S. outlets. For Amazon, it is their virtual (i.e., online) and not physical presence that has brought them to a commanding retail position. In many ways, these two retail giants are pulling on different sides in a tug-of-war that will shape the future of retailing. On Walmart’s side are traditional store-based retailers that feel the customer experience takes place best when they can interact directly and face-to-face with the customer. These retailers believe connecting with customers on a personal level is the key to forming long-term customer relationships.
Amazon sees the world in a much different light. Amazon and other online retailers feel there are important aspects of customer shopping that cannot be learned by simply talking with a customer while they are in a store. Instead, for them, relationships can be built just as well, if not better, with advanced computer technology that continually monitors shoppers’ online activity. These technologies are adept at learning customers’ needs and, consequently, sending shoppers useful information to help make purchase decisions.
For marketing students, the battle between these two giants is worth understanding. In this case, the company that has ruled the industry for years must decide whether the changes they are seeing in how customers shop are real and long-term, or are just a fad. Whether Walmart jumps more aggressively into online sales remains to be seen, but as reported in this Fortune story, one Wall Street investing company suggests Walmart take a more aggressive approach to selling online. The suggestions are interesting, but the real value of this story is to understand how an old-fashion marketer may have to adapt to survive. While Walmart is far from being a dying retailer, there is a strong argument to be made that the company needs to make changes if they want to remain at the top of the retail market.