From Forbes on December 15, 2016:
With the holiday shopping season entering the home stretch, it seems that Amazon.com will be the Grinch who stole Christmas from competing retailers this year. According to the Prosper Insights & Analytics December survey of nearly 7,000 U.S. adults, more than one in four holiday shoppers (26.2%) indicate they have purchased most of their gifts from the online giant this year, increasing 10% from last year.* Walmart ranks second place with holiday shoppers this year at 14.5%, lagging Jeff Bezos & Co. by almost 50%. Target, Kohl’s, Macy’s, Best Buy, JC Penney, Toys R Us, eBay.com, and Costco follow, respectively, with single digit percentage shares. [*Results are tallied from an unaided, write-in question posed to consumers. Figures include digital as well as brick and mortar locations, where applicable.]
This is the third consecutive holiday season that Amazon has held the gifting champion title among shoppers over Walmart. With the big discounter’s share slipping since peaking in December 2013, Walmart has realized a 3-year compound annual growth rate (CAGR) of -13.9% to Amazon’s +15.2%. Consequently, Amazon has been steadily increasing the gap between it and Walmart, which is at nearly 12 percentage points this year. A decade ago, during the December 2006 holiday season, Walmart maintained a 15-point lead over Amazon. Certainly, with shopping behaviors evolving and consumers increasingly gravitating online – and specifically, Amazon – it appears that Walmart still hasn’t figured out how to address the Amazon challenge.
Adding insult to Walmart’s growing injury is the fact that Amazon dominates the big discounter in major demographic categories (gender, generation, household income) – except for one: Walmart’s last bastion is lower income households (earning under $35,000/year). While this isn’t too surprising, given that this is Walmart’s shopper sweet spot, its lead over Amazon for this group is on the decline, narrowing to just one percentage point for both the 2015 and 2016 holiday shopping seasons. As one might expect, Walmart’s 3-year CAGR among lower income households is also in the red: -7.4%. In contrast, Amazon’s growth rate over the same period is +20.7%, outpacing its aforementioned CAGR among holiday shoppers in general (+15.2%).
Further, it’s clear that Amazon is re-writing the rules for an excellent customer experience. Not only is the online behemoth Prosper’s second place Customer Service Champion currently (behind L.L.Bean), but shoppers indicate that Amazon is setting the benchmark for the 2016 holiday season as well, according to the Net Promoter Score® metric of loyalty and customer affinity. Among the top ten retailers that consumers have shopped this season for gifts, Amazon received the highest Score (67.4%), well above competitors and nearly double that of Walmart (35.3%), which landed at #10 – the lowest Score of the grouping. Walmart’s Score also fell below the overall average NPS® among holiday gift retailers in general, perhaps an indication of why shoppers are slipping from the big discounter’s grasp.
With confidence on the rise and nearly one in ten holiday shoppers feeling better about their holiday spending positions now that the contentious Presidential election has concluded, it appears that retailers may have a prime opportunity to capitalize on last minute shoppers. However, with shoppers clearly opting for Amazon over Walmart, it appears that the big discounter just might have to take 2017 to regroup and, once again, attempt to address Amazon’s challenge. The question remains, though: is time running out for the once-dominant Walmart?
Net Promoter, NPS and Net Promoter Score are trademarks of Satmetrix Systems, Inc., Bain & Company, and Fred Reichheld.