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The Zacks Analyst Blog Highlights: Amazon.com and Walmart

Zacks Equity Research

For Immediate Release

Chicago, IL – February 27, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Amazon.com, Inc. AMZN and Walmart Inc. WMT.

Here are highlights from Wednesday’s Analyst Blog:

Is Amazon’s Cashierless Store a Tough Competitor of Walmart?

 Amazon.com, Inc. made a strong push into the American grocery industry earlier this week as it launched its first cashierless supermarket in Seattle. This grocery store concept has been up Amazon’s sleeve since 2015 but the retail giant is finally equipped to face challenges that come with such a shopping outlet.

In addition, unlike the company’s other ventures in the grocery industry, such as its Go Stores and Whole Foods stores, this new grocery shopping vision stands to revolutionize the way its customers shop and at what scale.

Cashierless Store Fortifies Amazon’s Physical Retail Footprint

Amazon’s biggest advantage with regard to its new cashierless store is its massive online presence. This is evident in the way the retail giant incorporated branding at Whole Foods stores and offered exclusive discounts to more than 150 million Prime subscribers. The company acquired Whole Foods Market for $13.7 billion in 2017.

Apart from the discounts, Amazon is offering a range of Whole Foods products for delivery via AmazonFresh, the company’s grocery delivery service.

Although Amazon started its first cashier-free convenience store in 2018, the newly-opened Amazon Go Grocery store spreads across a sprawling 10,400 square feet and stocks about 5000 products, which make it considerably larger than the former.

This means that Amazon handled a cashierless model before albeit on a smaller scale. Therefore a larger-scale operation wouldn’t be difficult for this retailer with the right technical expertise at its disposal, which it already possesses from its extensive online business.

Walmart Yet to Match Amazon’s Expertise

Walmart Inc., Amazon’s largest competitor, also unveiled its very own cashierless neighborhood market last month. The company may have started its new venture to meet ever-growing consumer demand, it still needs to address certain issues before turning its new project into a profit-making business.

Walmart to a large extent is a brick-and-mortar business that is on its way to become online. The company is trying to boost customer experience by shortening the checkout time with its cashierless store, which needs to overcome problems, such as unrecognized items in the bagging area, glitches with payment and traffic at the checkout kiosks.

In such a scenario, a cashierless, self-checkout-only market is expected to fight more challenges than a traditional grocery shopping model that has two options for checkout, one for lesser number of products and another with more items in the shopping cart.

Further, the company plans to lower its brick-and-mortar expansion, a decision evident in its confirmation to close seven of its Neighborhood Markets in 2019. These markets are small supermarkets that typically sell groceries. The closure of these stores raises doubts whether Walmart can handle small stores effectively.

Of course, operating a cashierless store would mean reducing labor costs and possibly boosting margins but unless the retail giant can address the aforementioned woes, the new venture wouldn’t aid customer experience.

Both Amazon and Walmart carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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