For Walmart And Amazon's Grocery Businesses, The Pressure Is On

RBC's first-hand checks and surveys point to Walmart Inc's WMT grocery business gaining market share in the current environment, but it merely marks an acceleration of prior trends, according to Mark Mahaney.

What To Know

Walmart's online grocery business is clearly a "major beneficiary" amid the coronavirus pandemic but it would be a mistake to assume it has reached an inflection point, Mahaney said on CNBC.

RBC has been conducting similar checks for the past five years and recent momentum is merely an "acceleration of a trend that has been building" over time.

The New York Times reported over the weekend that grocery orders on Amazon were as much as 50 times higher than usual but there is "no way" any company's fulfillment network can handle this level of traffic. As such, the pressure is on for Amazon.com, Inc. AMZN to offer a flawless experience today to capitalize on these trends.

What's Next

Amazon did hire 100,000 new employees to boost up its supply chain and if it keeps customers happy it will become a key beneficiary of an encouraging trend. Specifically, 55% of those surveyed by Mahaney said they plan on increasing their online grocery activity once the coronavirus pandemic is resolved.

But Amazon could become a victim, like every other company, of the "second order impact" if unemployment rates soar to north of 10%, Mahaney said.

"There's no escaping that, the question is if we are really going to get that," he said.

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