Amazon Moving Retail Wars To An Unexpected Battleground: Physical Stores

Just a few years ago, it might have seemed unbelievable that the ShopTalk retail conference would be dominated by talks about the vital role that physical retail stores, rather than exclusively online platforms, will play in the future of retail. 

It's true: Amazon.com, Inc. AMZN continues to invest heavily in its physical presence, while Walmart Inc WMT is pressing its brick-and-mortar advantage, KeyBanc Capital Markets analyst Edward Yruma said in a Wednesday note. 

Amazon has had early success with its physical Amazon Go store testing, the analyst said. The company did not comment on whether it plans to open more Amazon Go stores or expand its Go technology to Whole Foods locations, he said. 

Walmart Plans Expansion Of Online Pick-Up, Grocery Delivery 

At the same time, Walmart has been focusing on how it can optimize online sales by taking advantage of its physical store locations, Yruma said: this year, Walmart plans to expand the number of stores that offer online sales pick-ups from 1,200 to 2,200.

Walmart has also seen early success in its pick-up towers and plans to roll out 650 towers this year, according to KeyBanc. Walmart said its Net Promoter Score — a metric that measures how likely customers are to recommend a store to other customers — is up 5 percent in locations where it has a tower, according to the equity research firm. 

Walmart plans to expand its grocery delivery service to include more than 100 national metro locations this year, Yruma said. 

 'A Seamless Experience'

The brick-and-mortar store is making a comeback, at least for now, the analyst said. 

“Stores are still relevant and appear to be gaining in importance, at the margin, as retailers pivot away from separate channels to a fully integrated retailing model in an effort to provide the customer with a seamless experience." 

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