Retail’s latest earnings cycle demonstrates how the line between “the store” and “the app” has effectively disappeared.
The fastest-growing parts of businesses across the retail sector are the ones built on top of the physical footprint rather than separate from it. Same-day delivery out of stores, third-party marketplaces and retail media networks layered onto existing traffic, and AI-assisted shopping have been the primary drivers of both growth and margin.
Walmart
Walmart’s fiscal Q2 earnings showed e-commerce as the standout growth engine, with global e-commerce sales up 23%, U.S. e-commerce up 24%, and Sam’s Club U.S. e-commerce up 26%.
CEO John Furner tied the growth directly to the omnichannel model, telling Fox Business: “Our multi-year growth in e-commerce is evidence that customers are choosing Walmart because we deliver price, speed, and convenience across a broad assortment. At Walmart, they can have it all.”
Target
Target’s Q2 results showed net sales totalling $26.5 billion, up 5.3% from a year earlier.
Target posted comparable digital sales growth of 8.7%, powered by more than 25% growth in same-day delivery. The company’s third-party sellers marketplace (Target Plus), retail media network that allows brands to run targeted advertising campaigns using Target’s first-party customer data (Roundel), and their subscription membership program (Target Circle 360) demonstrated continued significance as non-merchandise sales grew more than 20% over the quarter.
On the Q2 earnings call, CFO Jim Lee expanded upon this growth noting, “gross billings from Roundel grew nearly 20%, Target Plus marketplace GMV grew more than 40%, and Target Circle 360 membership revenue increased by over 40% as compared to last year. These areas continue to drive outsized top and bottom-line growth for us, driving greater relevance, loyalty, and choice for our guests.”
Lowe’s
Lowe’s Q2 report noted a revenue of $26 billion, up 8.3% year-over-year.
The retailer delivered online sales growth of 15.7%, part of a fifth consecutive quarter of positive comparable sales. CEO Marvin Ellison attributed the gains to investment in the digital experience, saying “These investments include tailored experiences on Lowes.com and our mobile app, as well as expanded visualization capabilities and the ongoing growth of our online Marketplace.”
Ellison also attributed some of their success to the company’s AI shopping assistant, Mylow, which has now supported more than 25 million customer questions, noting how customers who use it convert online at triple the rate of those who don’t.
Best Buy
Best Buy’s Q2 results showed comparable sales up 4.1%. The company’s domestic gross profit rate also rose slightly when compared to last year, growth they attribute to the success of their Marketplace and Best Buy Ads businesses.
Incoming CEO Jason Bonfig spoke of their growth, attributing it to how “Over the past several years, we have invested in areas that matter most to customers, including elevating specialty expertise in our stores, partnering closely with our vendors to bring innovation to market, and improving fulfillment speed and execution across our supply chain.”
Amazon
Amazon’s Q2 results noted that net sales increased 20% to $200.6 billion. President and CEO Andy Jassy framed the growth around improved delivery speed and ad business expansion, saying “In Stores, we again set record delivery speeds for Prime members in the first half of the year—over 40% more items delivered same-day or overnight, with Grocery and Everyday Essentials growing meaningfully faster than the rest of the business. And, Advertising had another strong quarter with 26% year-over-year growth.”
Jassy also pointed to AI as an emerging front end for shopping itself, noting that more than 350 million customers used Amazon’s Alexa for Shopping over the past 12 months, with active users nearly doubling in the quarter.
Home Depot
Home Depot reported Q2 online sales growth of 11%, marking the company’s fifth consecutive quarter of double-digit year-over-year online growth. According to Billy Bastek, Executive Vice President of Merchandising, this growth has been “driven by our ongoing investments across our interconnected platforms…and our faster delivery speeds are resonating with customers and driving greater engagement.”
More than 65% of deliveries for in-stock parcel products now arrive the same day or next day, and Home Depot recently launched nationwide Express Delivery on thousands of products, promising delivery in two hours or less.
The Takeaway
Growth is currently coming from making stores, apps, marketplaces, and delivery networks function as one system rather than separate channels.
Walmart, Target, Lowe’s, Best Buy, Amazon, and Home Depot all posted double-digit online growth this quarter, and in each case, executives pointed to the same three levers — faster fulfillment out of existing stores, higher-margin marketplace and advertising businesses layered onto that existing traffic, and AI tools that are starting to shape how customers discover and choose products. None of these retailers built a separate online business from scratch. They extended the one they already had.
The retailers pulling ahead are the ones making the seams between channels disappear for the customer, providing a single continuous experience across different channels.
Image via Unsplash.