Amazon and Walmart Hit the Wall as Shoppers Shift Spending

The intense rivalry between eCommerce titan Amazon and brick-and-mortar giant Walmart has long pitted the two companies against each other. Now, both retailers have a new challenge: Shoppers themselves.

Recent earnings reports have delivered a warning shot for both industry heavyweights. After years of riding the tailwinds of a pandemic-induced shift to digital shopping, both companies now face a slower-growth environment as consumer spending patterns evolve and tariffs threaten price increases on everything from furniture to clothing.

In the first three months of this year, Amazon and Walmart posted their weakest quarterly sales growth since before COVID-19 unfolded in 2020. Amazon’s year-over-year growth clocked in at 3.7%, while Walmart’s was slightly lower at 3.2%. These figures barely outpaced inflation and represent a stark decline from their average growth rates in earlier years.

Since 2022, Amazon’s quarterly growth typically hovered around 10%, making its 3.7% particularly lackluster. Walmart’s growth, usually in the 5% range, also contracted to historic lows.

A forthcoming report from PYMNTS Intelligence unpacks how a move by consumers to direct more dollars toward things other than stuff is challenging the two companies’ one-stop-shopping strategy.

Walmart dominates in groceries and Amazon for discretionary purchases like clothes and electronics, but shoppers have other demands on their pocketbooks. As the report estimates the two industry giants’ share of U.S. consumer spending overall, it reveals that the pandemic-era tailwinds that fueled eCommerce have dissipated. In their place: A consumer focus on paying for services, experiences, healthcare and housing.

The report, the latest installment of PYMNTS Intelligence’s “Whole Paycheck” series, is based on corporate earnings reports and national data from the U.S. Census Bureau and the Bureau of Economic Analysis. It shows that both Amazon and Walmart are now growing at or near the rate of inflation, suggesting that their actual unit sales are essentially flat.

The boost in prior years from accelerated online shopping, stimulus-fueled demand and reduced competition from smaller retailers clobbered by the pandemic is gone. In its place is organic demand — and according to PYMNTS Intelligence data, it’s tepid.

When looking just at the retail sector, Amazon continues to hold an edge over Walmart. In the first three months of 2025, Amazon captured 8.6% of America’s total retail spending — its highest first-quarter share to date, up slightly from 8.4% a year earlier. Walmart held steady at 7.7% of total retail spending over the same period.

But retail is just one part of consumer spending. People must also pay for housing and healthcare, along with vacations and experiences. When viewed through that broader lens of total consumer spending, a different picture emerges: Both Amazon and Walmart are losing ground in the battle to capture wallets.

In Q1 2025, Amazon’s portion of total consumer spending declined to 3.3% from 3.4% a year earlier, while Walmart dropped to 2.6% from 2.8%. These drops aren’t attributed to competitive weakness within the retail sector but to structural shifts in how consumers are allocating their dollars.

As spending migrates away from goods and toward services, experiences, healthcare and housing, retail — especially mass retail — is losing wallet share in the broader economy. This trend isn’t just a recent-quarter anomaly; both companies have shown a gradual erosion or modest long-term decline in their share of total consumer spending since 2021.

Perhaps one of the most intriguing developments is the subtle shift occurring within discretionary spending categories, which include items like electronics, clothing, furniture, sports, music and hobbies. This segment has historically been an Amazon stronghold. In Q1 2025, Amazon saw a typical post-holiday dip in its discretionary share, falling to 23% from 26% in Q4 20248. While seasonal, this level represents one of Amazon’s lower Q1 discretionary shares since 2022.

In stark contrast, Walmart’s share of discretionary spending jumped to 6.4% in Q1 2025, marking its strongest seasonal performance in two years. Notably, this increase was larger than the bump Walmart experienced a year earlier. While it remains to be seen if this is a temporary seasonal effect or a more fundamental shift in consumer preference, the uptick contrasts with Walmart’s past performance in this area and suggests potential momentum.

Walmart’s historical focus on price leadership, coupled with its expanded eCommerce efforts, may be starting to resonate in higher-margin categories long dominated by its online rival. As inflation eases but wallet pressure intensifies due to the Trump administration’s global tariffs agenda, price and perceived value appear to be back in the driver’s seat for many consumers.

For both companies, discretionary spending remains a critical battlefield. For Amazon, protecting its share in this profitable area will require renewed attention to pricing competitiveness, delivery costs and maintaining loyalty stickiness.

For Walmart, this recent gain could represent its best shot yet at reshaping its position in these crucial higher-margin retail segments. Tariffs that raise sticker price could, of course, could be the spoiler.

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