It was a busy week for the two titans of retail, as the reigning box-store king struck no less than three new partnerships while rival Amazon got set to say goodbye to Founder Jeff Bezos as CEO, with a mix of news about disruption, acquisitions and investigation.
All of this took place amid a backdrop of solid retail-related earnings reports that showed just how excited consumers are to be heading out to go shopping again. Whether (and how long) that shift back to physical retail will last remains to be seen, but for the moment, shopping without a mask on is the hot new thing as we sit on the cusp of what promises to be a much more normal summer.
In a deal framed as “scale meets style,” Walmart and Gap announced plans to collaborate on a multi-year exclusive line of branded sheets, towels, pillows, comforters and other household decor items. The 400-piece Gap Home collection, which is set to debut on June 24, was touted as a first for both companies.
“We’re thrilled that Gap selected Walmart as the exclusive retailer to debut its home brand,” said Anthony Soohoo, EVP of the home division at Walmart, noting that the deal with the San Francisco apparel giant marked Walmart’s first team-up with a fashion retailer, a partnership that is sure to encroach on rivals such as Bed, Bath & Beyond. “Over the past few years, we’ve focused on expanding our home assortment to bring high-quality, stylish home goods and decor to our customers at an unbelievable value,” Soohoo added.
The day before, Walmart announced a different partnership with AT&T to bring high-speed internet service to low-income households through the federal Emergency Broadband Benefit program. While the move to help bridge the so-called digital divide has philanthropic underpinnings, it also helps to raise awareness of Walmart’s presence in the digital media space, where it significantly lags behind Amazon’s basket of services and devices.
And lastly, a third partnership with ShipBob was also announced, aiming to help bring two-day shipping to Walmart’s growing roster of independent marketplace sellers.
Turning to Tires
Auto parts and service have long been a staple category for Walmart, but the company has moved to reflate sales at its tire business just as consumers are getting out and about again. Add the impending summer driving season and family road trips, and the outlook for this segment starts to look pretty good.
It is amid this expected uptick in tread wear that Walmart this week announced a “variety of improvements that make buying and installing tires easier than ever.”
The largely digital tweaks include better app access and improved online shopping and sizing tools, as well as scheduling and visibility for installation appointments — all under the aptly named Walmart Tire Finder feature.
Amazon Rx Disruption
As much as the Walmart-Gap tie-up will heighten competition in the home furnishings category, few things can disrupt a retail segment the way an Amazon announcement does. That is exactly what happened this week when reports surfaced that the eCommerce giant is preparing to enter the physical pharmaceutical space, a revelation that immediately sent shares of CVS, Walgreens and Rite Aid tumbling.
Details on this latest retail expansion remain slim, but there is no doubt that Amazon has been taking a much closer look at the healthcare and drug space lately, given the launch of its online Amazon Pharmacy storefront last November, as well as the recent debut of its Prime Rx prescription price check service.
Add to that the fact that Amazon is also purported to be in the early stages of rolling out a second, more mainstream grocery store chain to augment its existing Whole Foods business, and the idea of bolting on a pharmacy to a supermarket — the way rivals, including Walmart, do — starts to gain traction.
Amazon’s Big Acquisition
Also during Jeff Bezos’ final week as CEO, the soon-to-be executive chairman announced his second-largest acquisition ever: the $8.5 billion purchase of iconic film studio MGM.
While this deal, once fully digested, may ultimately fall under the Amazon disruption heading, for now, it is simply further evidence that the company is investing heavily in streaming media and content to get more eyeballs on its Prime Video platform.
“MGM has nearly a century of filmmaking history and complements the work of Amazon Studios, which has primarily focused on producing TV show programming,” the joint statement read, noting the 4,000-plus films and 17,000 TV shows that are included in the deal. Amazon also said it would help in the archival and preservation of MGM’s heritage and cataloging of its intellectual property, while also making them more readily available to customers for viewing.
“Through this acquisition, Amazon [will] empower MGM to continue to do what they do best: great storytelling,” the company said.
Oh, and MGM’s iconic roaring lion logo was also included in the sale.
Amazon Under Investigation
We could have a long debate about the methods and strategies that led to Amazon’s two-decade ascendence in the online retailing space, but it’s undisputable that Amazon is far and away the most dominant player in eCommerce right now.
It is that very dominance — marshaled by Bezos since 1994 — that has attracted the attention of regulators and has seen Pennsylvania, Massachusetts and Washington, D.C. join a growing antitrust probe into its selling and pricing practices.
“Amazon has used its dominant position in the online retail market to win at all costs. It maximizes its profits at the expense of third-party sellers and consumers, while harming competition, stifling innovation and illegally tilting the playing field in its favor,” D.C. Attorney General Karl Racine said in a news release.
For its part, an Amazon spokesman pointed to a previous statement, saying “the presumption that success can only be the result of anti-competitive behavior is simply wrong.”