This week, in an attempt to win over cost-conscious customers, Amazon and Walmart, the two retail behemoths, are intensifying their discounting strategies.
For its part, Amazon is also planning to create a section with inexpensive products sent from China to customers abroad, apparently taking a cue from eCommerce behemoths like Temu and Shein. According to the article, the online marketplace plans to start taking inventory in the autumn and integrate vendors in the next months.
An Amazon representative told Reuters, "We are always exploring new ways to work alongside our selling partners in order to please our customers with more selection, lower prices, as well as greater convenience."
As for Walmart, the retailer is going all out for summer sales. After its members-only Walmart+ Week, which concluded recently, it will have an open-to-all event called Walmart Deals from July 8 to July 11. According to a press statement from the firm, the latter is expected to be the retailer's "biggest savings event ever."
According to further information from the PYMNTS Intelligence "Tracking the Digital Payments Takeover" report, Walmart generally has a more budget-constrained customer to appeal to than Amazon. According to the research, 34% of Walmart customers earn less than $50,000 a year, compared to just 16% of Amazon customers. Furthermore, compared to only 19% of Amazon's consumers, the survey indicated that 30% of Walmart's customers struggle to make ends meet and pay their monthly expenses.
Notably, the study revealed that both businesses are increasing their market share among customers earning over $100,000 annually, with Amazon's increases being more noticeable than Walmart's.
In general, retailers are facing an increasing amount of difficulty due to customers' price sensitivity; this is why Walgreens Boots Alliance is currently thinking of closing up to 25% of its retail locations in the United States. Amidst persistent inflationary concerns, the Bureau of Economic Analysis has updated its consumer expenditure statistics to reflect lower levels. Sales at restaurants are declining.
There is an increase in financial instability among consumers. In fact, according to PYMNTS Intelligence analysis, the percentage of consumers living paycheck to paycheck has reached a two-year high.
Ten percent of American customers report having trouble paying their monthly expenses, living paycheck to paycheck, and earning $50,000 or less annually. Not that they won't pay them eventually, but in a recent piece, PYMNTS CEO Karen Webster noted that every month turns into a game of bill-pay roulette.
Because of this, the customer may experience a double punch from the present pricing, wage, and inflation dynamics, according to Webster. "They not only struggle each month to make ends meet, but they also worry most about their pay and job security because there may not be as many job options available and the labor market is showing recent signs of cooling down."
With Amazon and Walmart stepping up their pricing tactics to attract cost-conscious shoppers, there are growing issues facing the retail industry as a whole. Walmart's massive sales events and Amazon's decision to include inexpensive products from China demonstrate their attempts to adjust to changing customer demands.
Consumer financial stress is still a major issue, however, as many are dealing with unstable finances and growing living expenses. Retailers' effectiveness in providing value while addressing these economic realities will be critical in deciding how long they can maintain customer loyalty.
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