Intense Competition Pushes Leading Retailers to Invest in Omnichannel 

As consumer sentiment continues to rebound from its historic lows during the post-covid period, retailers are competing fiercely to secure revenue streams and acquire new customers. This competition is pushing many retailers to invest in omnichannel retail options for customers including buy online, pick up in store capabilities.

According to the National Retail Federation, retail sales competition intensified in 2023, with companies such as Walmart Inc., Amazon, Costco Wholesale Corporation, Kroger Co., and the Home Depot topping the list of U.S. retail sales over the period. Overall, U.S. retail sales from the top one-hundred companies grew by over 3% from 2022 to 2023. Walmart had the most U.S. retail sales at $534 billion in 2023, more than double second-place Amazon’s U.S. retail sales. 

Digging into company data, evidence of intense competition is littered throughout publicly-traded retailers’ financial filings. In fiscal year 2023, public SEC filings of form 10-k annual reports for many of the top U.S. retailers indicated the intense level of competition within the retail sector. Costco Wholesale Corporation noted that “Our industry is highly competitive… Walmart, Target, Kroger, and Amazon are among our significant general merchandise retail competitors in the U.S.” (p.7). CVS Health Corporation wrote that the “retail pharmacy business is highly competitive”, with Walgreens, Rite Aid, Walmart, and Amazon being key competitors (p. 17). Target Corporation (p. 18) indicated a peer group of companies with whom they compare common stock shareholder returns, including many of the top ten leaders in U.S. retail sales such as Walmart, Costco, Kroger, CVS, and Amazon, among other listed companies, with The Kroger Co. (p. 23) following suit with a similar peer grouping strategy. All of the top 8 retailers either list each other as competitors or peers, or are listed as competitors or peers in one another’s annual reports. 

Retailers outside of the top 8 routinely list top 8 retailers among their competitors as well. For example, the 10-K of Kohl’s for the fiscal year ended February 3, 2024 lists Amazon, Walmart, and Target among its competitors alongside several retailers outside the top 8. Likewise, Dollar Tree’s 10-K for the fiscal year ended January 28, 2023 lists Walmart and Target as competitors alongside several retailers outside the top 8. Retail corporations are clearly aware of the intense competition within the sector, as well as who their key competitors are within the marketplace.

Given that U.S. retailers are well aware of the intense competition and competitors that they face within the retail sector when it comes to securing revenue streams and acquiring new customers, it comes as no surprise that retailers are turning towards innovative strategies to appeal to customers. Among these innovative customer acquisition strategies is perhaps the most relevant for adapting business models towards the 21st century digital economy: omnichannel retail strategies.

Omnichannel retail strategies create opportunities for customers to shop across a variety of potential settings, from traditional brick and mortar storefronts to desktop websites and mobile apps, while also focusing on customer interaction across multiple channels in-person or online utilizing various social media platforms. Buy online, pick up in store is a prominent example of an omnichannel offering. Other tools such as customer-facing online product availability checking options allow for shopping journeys to be omnichannel even if payment and fulfillment still occur in a brick-and-mortar store, as did 83.6% of retail sales in Q4 2024 according to the U.S. Census via St. Louis FRED database.

Corporations such as Costco Wholesale have recognized the imperative nature of increasing omnichannel presences in the modern marketplace, stating in a recent 10-K that “if we do not successfully develop and maintain a relevant omnichannel experience for our members, our results of operations could be adversely impacted” and “omnichannel retailing is rapidly evolving, and we must keep pace with changing member expectations and new developments by our competitors. Our members are increasingly using mobile phones, tablets, computers, and other devices to shop and to interact with us through social media” (p. 12). Kroger Co. said “the foundation of our value creation model is our omnichannel retail business” (p. 25), and Walmart Inc. noted “failure to successfully execute our omni-channel strategy and the cost of our investments in eCommerce and technology may materially adversely affect our market position, net sales and financial performance” (p. 15). Other corporations within the top ten U.S. retailers, such as Albertsons Companies Inc. (p. 8), The Home Depot, Inc. (p.5), Amazon.com, Inc. (p. 6), and The Lowe’s Companies, Inc. (p. 1), , all mention the importance of omnichannel retail strategies within their business models as indicated by form 10-k filings. 

As competition in the U.S. retail sector grows fiercer, retailers are under pressure to differentiate themselves and demonstrate value to customers in an increasingly competitive market. The aggressive race between leading players in the retail marketplace to appeal to consumers has made omnichannel retail options a worthwhile investment, as consumers’ revealed preferences demonstrate a strong preference for retailers giving consumers more options in their shopping journey. Companies are investing heavily in seamless integration between physical and digital shopping experiences, recognizing that failure to do so may result in lost revenue and diminished market position. With major industry players like the top 8 retailers increasingly investing in omni-channel options in response to pressure from competitors, the struggle for revenue and customer acquisition will only intensify. U.S. retailers will need to continuously innovate to meet evolving consumer preferences or risk falling behind in this high-stakes, competitive retail landscape.