Sarah Nassauer
Appearances
The Journal.
The Battle to Be the King of Retail: Walmart vs. Amazon
Yeah, you know, there's, I don't know what it is about us humans, but we do like to think of ourselves in these types of competitions.
The Journal.
The Battle to Be the King of Retail: Walmart vs. Amazon
It's a Goliath versus Goliath story and everyone else suffers in some way.
The Journal.
The Battle to Be the King of Retail: Walmart vs. Amazon
I remember that one of the editors who interviewed me to take that job described the job to me in terms basically as I would be covering the slow decline of the king of retail. And that is kind of what I thought might happen.
The Journal.
The Battle to Be the King of Retail: Walmart vs. Amazon
That's right. To me, it's really interesting to have watched Walmart kind of get to this point and that they've actually been able to pull it off. They've actually been able to figure out a way to deliver lots of the things that we kind of want in a daily, weekly way really, really fast. And really the last two years is when they made sort of a big leap to get there.
The Journal.
The Battle to Be the King of Retail: Walmart vs. Amazon
How did Walmart become the king of retail? Walmart became the king of retail through probably ways that we think about as like traditional retail, right? Building lots of stores, selling things at a lower price generally than lots of competitors, having a really broad selection. So it made it really convenient to just go to one store and buy groceries plus, you know, socks and a broom or whatever.
The Journal.
The Battle to Be the King of Retail: Walmart vs. Amazon
What are these two Goliaths fighting for? They're fighting for, you know, the dollars of the American consumer. That's our colleague Sarah Nassauer.
The Journal.
The Battle to Be the King of Retail: Walmart vs. Amazon
His mission was, you know, there were multiple things, but one big challenge was stores were in bad shape. Sales were not great. And the store experience was not that great. Employees were grumbly. People didn't like their produce. They didn't think the prices were really that low anymore. And Amazon was coming, right? And that wasn't even a thing that they had a true defense plan for yet.
The Journal.
The Battle to Be the King of Retail: Walmart vs. Amazon
There was this tiny test at the time in Denver of an online pickup and delivery grocery service. The idea was you ordered online and then you got your groceries delivered or you picked them up in the store parking lot. Walmart really leaned into the pickup side of that. This idea that you buy online and you pick up in a store parking lot.
The Journal.
The Battle to Be the King of Retail: Walmart vs. Amazon
That was in part because that's a much more profitable way to sell online than delivery. You're driving to the store, you're doing part of the labor for them.
The Journal.
The Battle to Be the King of Retail: Walmart vs. Amazon
But they also knew, and there's a lot of data that shows, at the end of the day, shoppers want the most convenient thing. And the most convenient thing is, bring it to my house. We're selling these groceries at the same price online as you get in our stores. That's appealing to people. We have something there. Let's build on that.
The Journal.
The Battle to Be the King of Retail: Walmart vs. Amazon
Setting up a delivery network was really hard for Walmart because it's so expensive and incredibly complex. There was experiments to see if their own store workers would be the delivery drivers. That created a lot of complexity as well. There were experiments... and a lot of attempts to use third-party services like the DoorDash, the Ubers of the world.
The Journal.
The Battle to Be the King of Retail: Walmart vs. Amazon
Billions and billions of dollars. And I think probably like on a deeper level, Amazon is such a clear threat. It was just internally over years getting through this like barrier of this is going to be expensive. This is going to be hard. You know, maybe we should have people do pickup, not delivery, right?
The Journal.
The Battle to Be the King of Retail: Walmart vs. Amazon
All of these internal debates, all of those challenges at some level, they sort of realized the board and executives, if we don't do these things, you know, we're going to lose big here.
The Journal.
The Battle to Be the King of Retail: Walmart vs. Amazon
That's an interesting question because I feel like it's so illogical for Walmart to see fast grocery delivery as their edge. You know, you associate that with Amazon, right? I think Walmart sees... low prices, having stores all over America, very close to most people that live in the country, and their giant grocery business as their edge.
The Journal.
The Battle to Be the King of Retail: Walmart vs. Amazon
Yeah, they are fighting for the king of retail title. I think that probably within Walmart, I can sense that there's been a shift from defining, like, internally, culturally themselves as the country's largest retailer by revenue to... the country's most convenient or most helpful retailer, you know, I think there will be kind of an identity process, an identity shift when that moment happens.
The Journal.
The Battle to Be the King of Retail: Walmart vs. Amazon
They called it Spark, which is named after the yellow star logo of Walmart. And, you know, the idea was that just like with Uber or DoorDash, these wouldn't be Walmart employees. These are folks just that have the Spark app. They can decide whether to take a job and they pull up in the parking lot and a Walmart employee loads up their car.
The Journal.
The Battle to Be the King of Retail: Walmart vs. Amazon
Or in some cases, they go into the store and like shop the order and drive it to a customer's house for a charge. You know, Walmart pays them and then there's often a tip.
The Journal.
The Battle to Be the King of Retail: Walmart vs. Amazon
They worked on the mapping technology that they used to determine which areas they can route deliveries to. And that technology became more complex and they were able to integrate census data and Will food spoil? And will the driver want to drive that far?
The Journal.
The Battle to Be the King of Retail: Walmart vs. Amazon
Sort of more factors and use, instead of zip codes, kind of a pixelated map that allowed them to just sort of get more granular and deliver to more places.
The Journal.
The Battle to Be the King of Retail: Walmart vs. Amazon
Because food is tough. You know, fresh food is just tough to deal with. It's very low margin. And they don't have grocery stores that have the same level of coverage. So they have to build a fresh network, which is what they are doing rapidly right now that is delivery-based.
The Journal.
The Battle to Be the King of Retail: Walmart vs. Amazon
And they have had so many different models of trying to figure out how to both sell food that people want to eat and are willing to pay the price for and then get it to people fast because they're a delivery company. It's been trickier for them. They don't have that infrastructure. That is not where they come from. Whereas that is where Walmart and like a traditional grocer, that's what they do.
The Journal.
The Battle to Be the King of Retail: Walmart vs. Amazon
I mean, Whole Foods is more expensive overall. And also, there's only a few hundred Whole Foods stores in the country, and they tend to be clustered around urban areas. There's 4,600 Walmart super centers, and they're everywhere.
The Journal.
The Battle to Be the King of Retail: Walmart vs. Amazon
That presents a challenge because a lot of people, when they go grocery shopping, they might want to buy organic milk. but they also might want to buy Coke and they don't want to go to places to do that, right? And right now you can do that at Walmart, but you can't do it at Whole Foods. So one thing that Amazon is experimenting with is this idea of an Amazon, they call it Amazon Grocery.
The Journal.
The Battle to Be the King of Retail: Walmart vs. Amazon
It's like a little store that's right next to the Whole Foods. And the idea is then you sort of have one location you're going to get all your grocery needs met.
The Journal.
The Battle to Be the King of Retail: Walmart vs. Amazon
It's increasing sales and they're grabbing market share. And they have to because Amazon is doing the same thing. They might lose their king of retail crown. Yeah, they might still lose their king of retail crown in the annual revenue sense, but they might also see market share slip and sort of be chipped away at in a way that I think a lot of people thought would happen 10 years ago.
The Journal.
The Battle to Be the King of Retail: Walmart vs. Amazon
What will that mean for them? I mean, I think it, you know, you could look at it as super meaningful or not that meaningful. And there's arguments for both. But I think sort of culturally, internally, and sort of psychologically, it is very meaningful. Bragging rights.
The Journal.
The Battle to Be the King of Retail: Walmart vs. Amazon
In competing against each other, they've become so incredibly powerful that there are lots of other losers, right? And when Amazon and Walmart grow their revenue by X percent, it's so many more billions of dollars than when a smaller company does it that they're still taking market share from others.
The Journal.
The Battle to Be the King of Retail: Walmart vs. Amazon
You know, I feel like Walmart is so formidable, as everyone who has sold to them or competed with them knows. I cannot imagine a future where... They're not a big player and a huge factor in what retail looks like in America. As someone who has followed the company for a very long time, fundamentally, I think one of the biggest issues is just
The Journal.
The Battle to Be the King of Retail: Walmart vs. Amazon
the internal tendency to move slowly because it's such a big place. But obviously, Amazon is a company that is built around technology and e-commerce and AI and all these things that seem like they're going to be important in our future. And Walmart has a totally different history and cultural corporate muscle.
The Journal.
The 20,000 Steps to a Walmart Manager's Six-Figure Salary
Well, my first thought is, why do they feel the need to do this? Is turnover going up? Do they feel they're losing some of their better store managers to other big box stores? The competition for those folks is really, really, really high across retail.
The Journal.
The 20,000 Steps to a Walmart Manager's Six-Figure Salary
It almost can't be understated how important a store manager is to Walmart. They are the ones who have the most control over the sales and profit of that box, of that store, and those stores are the most important financial entity in the whole company.
The Journal.
The 20,000 Steps to a Walmart Manager's Six-Figure Salary
It's really hectic. It's not for introverts. And it's, she is expecting the unexpected.
The Journal.
The 20,000 Steps to a Walmart Manager's Six-Figure Salary
She did several sort of tours of the store where you're literally walking around the store and understanding what's going on in every aisle and what needs to be stocked and where is there a mess and what work needs to be done.
The Journal.
The 20,000 Steps to a Walmart Manager's Six-Figure Salary
She was always holding her phone because it has a Walmart app that a lot of the workers use to communicate. It's a big store. It's over the size of three football fields. So you can't just like walk up to every worker at every moment and say, you know, can you do X, Y, Z? So they do use this app and walkie talkies. And they're talking to each other that way. They don't have segues? They don't.
The Journal.
The 20,000 Steps to a Walmart Manager's Six-Figure Salary
have segues. I can see customers maybe not finding that great, but she's constantly in contact, but also constantly walking around the store.
The Journal.
The 20,000 Steps to a Walmart Manager's Six-Figure Salary
You too. He was recording me. There was a guy who came up filming her, Nicole, and one of her managers who was asking a question about Snoop cereal. Snoop had sued Walmart. We didn't know really what was going on, but it was something related to that. She has to sort of have a calm answer while she's being filmed. What did you learn from spending a day with Nicole?
The Journal.
The 20,000 Steps to a Walmart Manager's Six-Figure Salary
I think seeing sort of how the chaos can be wrangled was just really, really interesting and eye-opening for me about what it really actually takes to run a store. How so? It's like they're managing all the humans that work for them and with them up and down, managing up their bosses and the people that work for them.
The Journal.
The 20,000 Steps to a Walmart Manager's Six-Figure Salary
They're managing all the stuff and making sure it arrives at the right time and can be unloaded and is on the shelf. And then they're managing customer expectations and trying to drive sales.
The Journal.
The 20,000 Steps to a Walmart Manager's Six-Figure Salary
The sales and profit goals for the store are set in corporate offices and then filtered on to her. And she has to meet those month by month, day by day, week by week. And so she's thinking about that for sure, as well as how profitable her store is. What's within her power to achieve those targets? She can decide some of what gets sold in her store.
The Journal.
The 20,000 Steps to a Walmart Manager's Six-Figure Salary
There's certain things and areas of the store where it's really her and her sort of direct reports that are saying, okay, for our store, for example, there was a little refillable barbecue bottle that she was selling at her store for 97 cents. And when we walked by, she explained, like, this is something that works well in our store. We have a low income core shopper.
The Journal.
The 20,000 Steps to a Walmart Manager's Six-Figure Salary
I know that this product is a low price point, but a high margin and we can sell a lot of them. So here we put them in this high traffic area at the end of a shelf. You know, she can control some of the product decisions and then she can also have some control over what they spend on labor.
The Journal.
The 20,000 Steps to a Walmart Manager's Six-Figure Salary
Some of that is decided by corporate, but ultimately it's her and her direct reports that are kind of looking at that minute by minute, day by day.
The Journal.
The 20,000 Steps to a Walmart Manager's Six-Figure Salary
Yes and no. I've talked to enough store managers over the years to know that I think she is exceptional in some ways in her ability to sort of handle the multitasking that is needed to do the job without losing it. I think she's typical in the sense that she came up in the company. She doesn't have a college degree. She grew up in the place where she is. She knows the community quite well.
The Journal.
The 20,000 Steps to a Walmart Manager's Six-Figure Salary
I think those things are more typical.
The Journal.
The 20,000 Steps to a Walmart Manager's Six-Figure Salary
To me, it says that there are these still these sort of like choke points. Jobs that are hard to fill because they're hard jobs and you have to have a lot of expertise over time to do them. I don't think any like college grad could waltz in and be the manager of a Walmart store, right?
The Journal.
The 20,000 Steps to a Walmart Manager's Six-Figure Salary
And as Nicole herself told me, you know, if you can run a Walmart store, you can run a Home Depot, you can run a Target, you can do other things. And so once someone has gotten to that level at the company, it makes sense that Walmart would really want to keep them.
WSJ What’s News
What’s News in Earnings: Big Retailers Start to Worry
Executives say they're going to try to do everything they can to negotiate with suppliers or different members that are part of various parts of their supply chain about how they can share these costs and in a way that doesn't eat into anyone's margins too much. But at some point, they're going to pass some of those costs along.
WSJ What’s News
What’s News in Earnings: Big Retailers Start to Worry
We're going to enter a period here of really fierce negotiations between all those parties because when you raise prices, customers, especially consumers, are still sensitive on prices, aren't necessarily going to buy as much of your stuff.
WSJ What’s News
What’s News in Earnings: Big Retailers Start to Worry
They said that sales over the holidays were fairly solid. Didn't grow like gangbusters, but fairly solid. But they really hit a note of caution for the current year. And that is a theme we've seen from lots of other retailers this earnings season is, yep, people are still buying, but this year is really unpredictable. And you saw some of the companies, their stocks dipped.
WSJ What’s News
What’s News in Earnings: Big Retailers Start to Worry
Walmart, for example, even though their sales were great, said they're kind of cautious for the year. And that has investors a little bit spooked about what might come.
WSJ What’s News
What’s News in Earnings: Big Retailers Start to Worry
It's a slightly different situation in that Walmart is the country's largest grocer and is known for low prices. So they have a little bit of more maneuverability through a period like this. But they mentioned some of the same issues in terms of tariffs, unpredictable consumer behavior is a reason they're a little bit more cautious on their guidance for earnings for the current year.
WSJ What’s News
What’s News in Earnings: Big Retailers Start to Worry
They've said that people continue to do sort of what they've done. It's not really a big change, but prioritize needs versus wants and that they might look to save money on something like milk and lettuce and cleaning supplies and splurge on something that's more unique like a trip.
WSJ What’s News
What’s News in Earnings: Big Retailers Start to Worry
We're seeing some of that high-low behavior, but it really depends on what socioeconomic group this shopper happens to be in.
WSJ What’s News
What’s News in Earnings: Big Retailers Start to Worry
A lot of shoppers that get frustrated when they can't find what they want on the shelf, then they can't buy it, and they took a trip to the store. They didn't order it online. And if the price is higher than they expected or higher than it used to be, that can be a point of disappointment or the checkout line is too long.
WSJ What’s News
What’s News in Earnings: Big Retailers Start to Worry
And you heard Target noting some of those things in their earnings, that they're working to make sure shelves are better stock, that checkout lines are shorter. They're aware of some of these consumer pain points.
WSJ What’s News
What’s News in Earnings: Big Retailers Start to Worry
Retailers are saying that consumers are still very cautious and that for many consumers, prices still feel so much higher than they did a few years ago, that that has a real impact on how people are able to buy things. I'm definitely going to be watching some of the government data around consumer sentiment, what retailers say about their prices as tariffs take effect if they do.
WSJ What’s News
What’s News in Earnings: Big Retailers Start to Worry
And I want to watch these prices really carefully. I'm really curious what's going to happen to the price of an avocado next week.
WSJ What’s News
What’s News in Earnings: Big Retailers Start to Worry
Retailers said they're not fans and they expect to raise prices. They've said that kind of thing for a while now because they've known that this is a possibility.
WSJ What’s News
What’s News in Earnings: Big Retailers Start to Worry
And some themes emerged in these earning calls, which was when it comes to China, a lot of retailers had planned for that and have already been dealing with tariffs on goods out of China and have diversified their supply chains and their manufacturing networks with that in mind. But Canada and Mexico are different and a tougher thing for them to absorb those price increases.