Sign up for our daily briefing

Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Denver news in your inbox

Catch up on the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Des Moines news in your inbox

Catch up on the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Minneapolis-St. Paul news in your inbox

Catch up on the most important stories affecting your hometown with Axios Twin Cities

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tampa Bay news in your inbox

Catch up on the most important stories affecting your hometown with Axios Tampa Bay

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Charlotte news in your inbox

Catch up on the most important stories affecting your hometown with Axios Charlotte

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Illustration: Aïda Amer/Axios

For some three decades, Walmart has held onto the massive market of low-income U.S. consumers, defending this territory from newcomers. But threats to its dominance are piling up.

What's happening: Amazon is emerging as a substantial rival to Walmart in the fight for an estimated $624 billion-a-year market, joining other retailers and brands and betting that — as it has in so many industries — it can capture a large part of this much-overlooked cohort.

The big picture: With competition rife for affluent and mid-range retail customers, the low-end market is the new, fierce battleground for big merchants. At stake is a third of U.S. households — those earning $50,000 or less a year — 88% of whom visited a Walmart last year, according to a recent survey by GlobalData Retail.

  • Since the 1980s, Walmart has come to dominate this sector of the consumer market with what so far has been an unbeatable strategy: go to every town (the juggernaut has 5,362 locations and sits within 10 miles of 90% of Americans) and undercut everyone else's prices.

But now it is facing competition against both its footprint and its prices.

  • Grocery's deep discounters like Aldi and Lidl from Europe have started to make a dent in Walmart's market share. Aldi has some 2,000 stores in 35 states, including in Bentonville, Arkansas, Walmart's home town.
  • "Aldi has built a cult-like following. ... The allure is all in the rock-bottom prices, which are so cheap that Aldi often beats Walmart at its own low-price game," CNN"s Nathaniel Meyersohn reports.
  • And the dollar giants are refusing to be left behind. To fight against Walmart's increasingly popular buy online and pickup-in-store model, Dollar General has developed an app that lets its shoppers do the same — capitalizing on its 15,500 U.S. locations.

Now Amazon, with its deep pockets and track record of disrupting industry upon industry, is entering the ring.

In a series of moves, Amazon is attempting to make itself more accessible to the tens of millions of lower-income U.S. households.

  • The company is leaning into its strong suit, injecting high-tech delivery into the fight. It is assuming that such shoppers want the same speedy delivery it offers to all its other customers — a perk that low-income households have long been excluded from, says Fred Killingsworth, a former Amazon manager who runs a retail consultancy.
  • Amazon has joined a New York pilot, along with Walmart and Shoprite, that lets food-stamp (SNAP) beneficiaries buy groceries online. It also rolled out a discounted Prime membership at about $72 a year, paid monthly — compared to the standard $119 per year — for those on SNAP or Medicaid.
  • It's adding lockers around the country at places like Kohl's to give customers worried about packages being stolen from their stoops a place to pick up goods.
  • It has launched a slew of private label products, ranging from sofas to button-downs, at cheap prices to compete with Walmart brands like Great Value and Time and Tru.

But, but, but: While Amazon may be able to make a dent in apparel or appliance sales to less-affluent shoppers, the most lucrative business is grocery, and the e-commerce giant will have much more difficulty winning that game, experts say.

  • "I think Amazon will have some impact but I don’t see it as being a major disrupter in this space," says Neil Saunders, managing director of GlobalData Retail.
  • "The focus has to be on private label at this end of the spectrum, especially when dealing with Aldi, as it’s all private label. Walmart’s private label has resonated with consumers for a long time," says Charlie O'Shea of Moody's Analytics. "Amazon is a new, niche player in food, and (Amazon-owned) Whole Foods is not viewed as a discount competitor."

Still, Amazon is beginning to chip away at many of its traditional weaknesses with the lower end of shoppers.

  • It's expanding its suite of private label products to food, recently adding Happy Baby for milk, cheese and trail mix.
  • And Amazon is considering opening its own chain of discount grocery stores to attract customers who don't want to pay Whole Foods prices.

Amazon and Walmart did not respond to requests for comment.

Go deeper

Erica Pandey, author of @Work
Oct 13, 2020 - Economy & Business

The winners of the stay-at-home economy

Illustration: Eniola Odetunde/Axios

The coronavirus pandemic has created a stay-at-home economy worth trillions.

The big picture: While the pandemic is killing scores of businesses that depend on office workers, it's also making way for startups and titans alike to conquer a new industry — powering our remote lives.

Dominion sends cease and desist letter to My Pillow CEO Mike Lindell

Photo: Stephen Maturen/Getty Images

Dominion Voting Systems on Monday sent a cease and desist letter to My Pillow CEO Mike Lindell over his spread of misinformation related to the 2020 election.

Why it matters: Trump and several of his allies have pushed false conspiracy theories about the company, leading Dominion to take legal action. It's suing pro-Trump lawyer Sydney Powell for defamation and $1.3 billion in damages, and a Dominion employee has sued Trump himself, OANN and Newsmax.

Off the Rails

Episode 5: The secret CIA plan

Photo illustration: Aïda Amer, Sarah Grillo/Axios. Photo: Zach Gibson/Getty Images

Beginning on election night 2020 and continuing through his final days in office, Donald Trump unraveled and dragged America with him, to the point that his followers sacked the U.S. Capitol with two weeks left in his term. This Axios series takes you inside the collapse of a president.

Episode 5: Trump vs. Gina — The president becomes increasingly rash and devises a plan to tamper with the nation's intelligence command.

In his final weeks in office, after losing the election to Joe Biden, President Donald Trump embarked on a vengeful exit strategy that included a hasty and ill-thought-out plan to jam up CIA Director Gina Haspel by firing her top deputy and replacing him with a protege of Republican Congressman Devin Nunes.