What would Walmart be if it were no longer thought of as the low price leader at retail? It may not be a purely academic question for long. According to Kirthi Kalyanam, director of the Retail Management Institute at Santa Clara University in California, the world's largest retailer could face some competition on the pricing front and it is far from certain that it will win.
"Amazon is actually in a better position than Walmart to be the price leader," Dr. Kalyanam, told The Christian Science Monitor. "Amazon has a lower cost structure than Walmart."
Amazon also has some momentum on its side as consumers go online to make a larger percentage of retail purchases.
"Consumers this year appear much more willing to open their wallets and are turning to online stores for the convenience of shopping wherever and whenever they like, but also as their primary source of information about products and inventory levels," said John Squire, chief strategy officer, IBM Coremetrics, in a press release. "Retailers have done an exceptional job across the board of appealing to consumers with highly personalized promotions and a slew of free shipping promotions."
Perhaps seeing its price advantage being eroded, Walmart has also turned to offer free shipping on online orders as well as in-store pickups. The retailer is offering free shipping on 60,000 gift items through Dec. 20 with no minimum purchase required.
Discussion Questions: Is Walmart in danger of losing its low price advantage to Amazon? What would it mean for the chain if it did? Is Amazon's model destined to be more efficient than Walmart's?