Can Grocery Insulate Walmart and Target From Online Rivals?
Walmart's (NYSE: WMT) biggest business is groceries, and Target (NYSE: TGT) is ramping up its position in the area. With both companies reporting weakness in certain general merchandise categories during the holiday season, sales of online groceries -- a growing business, and one usually involving the purchase of necessities -- may be the key to boosting revenue even when sales of other products slip.
Walmart recently reported disappointing fourth-quarter earnings, highlighting weakness in toys, video games, and clothing -- areas where online rival Amazon.com saw strength. Target issued a similar message about a month ago when the retailer disappointed investors with its holiday sales report. Walmart and Target are growing their online presence, but competition with Amazon remains fierce.
Amazon has expanded considerably in grocery -- the company said fourth-quarter grocery delivery orders from Amazon Fresh and Whole Foods Market more than doubled year over year. Still, Walmart also saw strength in grocery in the quarter, and Target last fall announced the launch of its new grocery brand called "Good & Gather." The jury is still out on whether Walmart or Amazon are winning the grocery game, but earnings reports show the market is big enough for everyone -- at least for now.
Source Fool.com
