The overview: Q3 was another strong quarter for Walmart and Amazon, and another weak one for Target. Shoppers are showing a clear preference for the convenience, product selection, and overall value that Amazon and Walmart offer, while being less impressed by Target’s assortment and shopping experience.

• Amazon’s North America net sales increased by 11% YoY, which the company credited to its “sharp pricing, broad selection, and fast delivery speeds.”
• Walmart US net sales rose 5.1%, helped by an increase in both traffic and ticket size, as well as its fast-growing ecommerce business.
• Target’s net sales fell 1.5%, marking its 12th straight quarter of flat or declining revenues.

Target under pressure: In some ways, Target’s slide offers better insight into how economic uncertainty is changing consumer spending patterns.

• The retailer’s largely discretionary assortment makes it more vulnerable to declines in consumer buying power. Shoppers are being “choiceful, stretching budgets and prioritizing value,” chief commercial officer Richard Gomez said on the retailer’s earnings call, causing them to buy fewer apparel and home goods and concentrate spending on food and other essentials.
• However, consumers are open to indulging if they can find the right item at the right price. Target’s “Fun 101” business, which includes toys, video games, music, and books, grew during the quarter, helping offset weakness in the rest of its business. Shoppers were also responsive to products that were new, stylish, and affordable—although being able to consistently deliver on all three continues to be a challenge for the retailer.

Walmart and Amazon pull ahead: For Walmart and Amazon, uncertainty has magnified their competitive advantages. Both retailers have a stronger value proposition than Target, which is being reinforced as they deepen investments in delivery speed and generative AI (genAI).

• While other retailers warn of pullback from lower-income consumers, Walmart is holding onto their spending—and capturing more dollars from mid- and high-income households—thanks to its ability to keep prices lower than competitors.
• Both Amazon and Walmart are leaning on faster delivery and membership perks to make their ecommerce services stickier for shoppers, a strategy that paid off for both. Q3 was a record quarter for Walmart+ sign-ups, while Amazon’s four-day Prime Day sale (its longest ever) in July was the biggest in company history.
• While Target struggles to identify products that consumers want, Walmart and Amazon are able to tap third-party sellers to fill gaps in their assortments, enabling them to be more responsive to trends without taking on the risk of excess inventory.
• Amazon and Walmart are also leading the way when it comes to genAI: Both companies have embedded the technology throughout their organizations to improve both the customer experience and worker efficiency.

What this means for retailers: Shoppers are on the hunt for value this holiday season—but, as Target, Walmart, and Amazon have all noted at various stages, offering value is not merely a matter of having the lowest price.

To capture consumers’ attention, retailers need to make sure they have products that resonate, an in-store experience that gets shoppers in a festive mood, and fulfillment options that satisfy customers’ desire for speed and convenience.