Amazon predicted to pass Walmart as largest retailer

Amazon’s sales momentum has it poised to end Walmart’s reign as the largest U.S. retailer in 2022, according to market research firm Packaged Facts.

Rockville, Md.-based Packaged Facts said Thursday that its projection is based on the expectation that Amazon’s sales will continue to grow at a much faster rate than Walmart’s.

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"Amazon already has an enormous impact on e-commerce sales, benefitting from its creation of an endless online aisle with products at competitive prices. Packaged Facts estimates that Amazon's U.S. gross merchandise sales will comprise 43% of U.S. e-commerce sales in 2019, up from 28% in 2015,” David Sprinkle, research director for Packaged Facts, said in a statement. “By 2022, we forecast that Amazon will contribute almost half of U.S. e-commerce sales.”

For its 2019 fiscal year ended Jan. 31, Bentonville, Ark.-based Walmart totaled revenue of $510.33 billion, up 2.9% from $495.76 billion a year earlier. Net sales for Walmart U.S. came in at $331.67 billion, up 4.1% from $318.48 billion in fiscal 2018. Walmart U.S. e-commerce sales grew 40% during fiscal 2019.

Related: Brick-and-mortar retailers narrow gap with Amazon

Seattle-based Amazon posted overall net sales of $232.89 billion for its 2018 fiscal year ended Dec. 31, marking a 31% gain from $177.87 billion in fiscal 2017. Sales at physical stores were about $17.22 billion in 2018, compared with $122.99 billion for online stores.

More recently, Walmart saw a 1.8% gain in revenue to $130.38 billion for its fiscal 2020 second quarter ended July 31. Walmart U.S. second-quarter net sales rose 2.9% to $85.2 billion, with e-commerce sales up 37%.

Today, Amazon reported that net sales for the fiscal 2019 third quarter ended Sept. 30 jumped 24% to $69.98 billion. Online store sales were $35.04 billion, up 21% year over year, while sales at physical stores dipped 1% to $4.19 billion.

“Despite Amazon's continued growth, Walmart does have advantages Amazon presently cannot match, even when accounting for Amazon's innovative incorporation of natural supermarket chain Whole Foods in 2017 or its partnership with department store retail chain Kohl's,” Packaged Facts stated.

The researcher noted its survey data shows that over 20% of Walmart purchasers use in-store services, including financial, pharmacy, optical and photo processing.

“Most notably, Walmart's in-store services strongly differentiate it from online competitors such as Amazon, which naturally cannot provide services, as well as from its brick-and-mortar competitors, many of which do not offer the same breadth of offerings or cannot match Walmart's pricing,” according to Packaged Facts. “These services therefore not only produce revenue but also significantly drive traffic, which is even more vital at a time when brick-and-mortar retailers of all shapes and sizes seek to revitalize in-store traffic.”

Packaged Facts also called Walmart “the click-and-collect king.” Walmart reported that, as of the end of the second quarter, 2,700 stores offered free grocery pickup and more than 1,100 stores provided same-day grocery delivery. The company aims to have 3,100 stores with pickup service and 1,600 stores with same-day delivery by the end of fiscal 2020.

“Among survey respondent click-and-collectors, 43% identified Walmart as the pickup location for their last click-and-collect order, three times the percentage of those who cited runner-up Target,” Packaged Facts said.

Meanwhile, Amazon has been rolling out its Prime Now online grocery delivery and pickup program to Whole Foods Market stores since early last year and now has it available in 88 cities for delivery and 30 markets for pickup. Last month, Amazon also expanded AmazonFresh, its perishables same-day delivery service, to 19 major markets in the U.S.

In grocery, Amazon climbed to the No. 10 spot on the 2019 Supermarket News Top 75 list of the largest retailers and wholesalers with consumables sales of $28.1 billion, up from No. 19 and sales of $14.3 billion the year before. Walmart remained at No. 1 with consumables sales of $270.12 billion.

Industry observers expect Amazon to boost its physical store presence. Earlier this month, The Wall Street Journal reported Amazon aims to open a chain of grocery stores beginning in Los Angeles, Chicago and Philadelphia. These stores would be part of dozens that Amazon plans to open nationwide, with other potential sites in metropolitan New York, New Jersey and Connecticut, including spaces of 20,000 to 40,000 square feet in shopping centers, the Journal said.

Whole Foods’ store count has risen by 37 locations since the closing of its acquisition by Amazon in late August 2017. At the time, Whole Foods had 468 stores overall. The Austin, Texas-based grocery chain now has 505 stores, including 484 in the U.S.

Amazon also now operates 16 Amazon Go cashierless convenience stores in Seattle, San Francisco, Chicago and New York. Two more are upcoming in Chicago. Published reports have said that Amazon Go outlets may pop up in new types of locations such as airports and grow to as many as 3,000 outlets over the next several years. Amazon’s other physical retail locations include 19 Amazon Books stores, four Amazon 4-Star stores and four Presented by Amazon outlets.