Profit Pregame

This Company is Taking a Huge Step to Become the King of Retail

The War Between Retail’s Biggest Names is Heating Up

In a bid to become the world’s largest retailer, this household name is stepping out of its comfort zone.

What’s happening?

For decades now, the battle between two of the giants of retail has been raging.

Walmart Inc. (WMT) has been among the most successful big box retail chains in history. In 1990, it became the U.S.’s largest retailer after a massive expansion throughout country. International expansion followed, and by 2001, Walmart ranked as the largest corporation in the world.

But with the advent of the internet in the late 1990s, another retail titan was born. What began as a humble online book seller, Amazon.com, Inc. (AMZN) quickly became a household name and the mantle of world’s largest e-commerce retailer soon followed.

The two companies have been duking it out for market share supremacy for years now, but the fight has grown more intense than ever recently.

Amazon has announced that it will be taking a huge new step that aims to steer traffic away from Walmart locations and towards its (literal) doors.

Where’s the money?

The two giants of retail have butted heads more and more often in recent years, trying one-up the other at the things each does best.

After Walmart’s incredible success with its Supercenters – a combination retail store and grocery store – Amazon bought supermarket chain Whole Foods Market, Inc. in 2017 to offer Amazon Prime members grocery deliveries.

In June 2020, Walmart announced a partnership with e-commerce shopping platform Shopify to attract third-party sellers – which Amazon has been incredibly successful with – to its own platform, Walmart Marketplace.

But earlier this month, Amazon announced its intention to escalate its fight with Walmart by stepping out of the digital space for the first time. The company best known for revolutionizing online shopping will soon be building its first large-format retail stores in California and Ohio.

The move is a clear shot directly at Walmart. While Amazon’s planned stores will be roughly one-third the size of a typical Walmart store, it’s easy to see that the company is testing the waters to see if it can make a larger move into Walmart’s brick and mortar territory.

With each company taking such big swings at the other, many investors are wondering where to place their bets.

Here’s what I think…

How do I get some?

In the end, I believe both Amazon and Walmart will benefit from the rivalry.

As the old saying goes, “competition breeds excellence.”

But if I had to give the edge to one over the other right now from a trading perspective, I would say Amazon is the better buy.

According to data from FactSet, Amazon’s sales eclipsed Walmart’s for the first time in the 12-month period between June 2020 and June 2021. And if Amazon is poised to make a big move into the physical retail store space, we could see that become a more of a trend than an aberration.

And right now, Amazon is still trading more than 5.6% off its high in July after a disappointing Q2 earnings report.

The price tag on AMZN shares is significantly higher, but a foray into the brick and mortar space could be just the catalyst it needs to eventually emerge as the winner in its fight with Walmart.

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In the Spotlight: The wait is nearly over for AAPL

Apple, Inc. (AAPL) has announced the release date of its newest model of iPhone.

The launch of a new iPhone is always a huge event for AAPL stock, with early reviews and sales figures swinging share prices in the days that follow.

Traders seem optimistic about the upcoming launch, as AAPL has edged up roughly 4.75% in the last week.

Apple has now announced a streaming event on Tuesday, September 14 in what many are speculating will be the iPhone 13 reveal.

Demand for 5G capable phones has been high, and the latest iteration of the world’s most popular smartphone is likely to see strong sales numbers in the days to follow. Keep an eye out for those numbers next week.

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