Walmart's 'low price' promise in focus after Amazon's warning

Walmart's "Everyday Low Price" promise will be put to the test when it reports quarterly results, after rival Amazon.com's warning that customers had turned bargain hunters, pressuring the online shopping behemoth to forecast a weak current quarter, reports Reuters.
Major retailers including Target, sector bellwether Walmart and Kroger have been pushing to keep prices on essentials low as many Americans shun big-ticket spending and turn to discount shopping in the face of sticky inflation.
While this has strained margins across the industry, Walmart's scale gives it more negotiating power with vendors. Its low prices could end up attracting shoppers who shun more high-priced shops, some analysts said.
"(Amazon's result) has sent a chill through the wider retail sector. That said, for a value-focused retailer like Walmart, performance may be better as its offers are more centered around essential products," Neil Saunders, managing director of research firm GlobalData said.
Wall Street expects Walmart, due to report second-quarter results on Aug. 15, to post a 4 per cent rise in quarterly revenue, according to LSEG, the slowest rate of growth in nearly two years.
"There's a generalized slowdown in the consumer. Its numbers are going to come within guidance. We are not going to see Walmart all of a sudden pop up," said Francisco Bido, senior portfolio manager at F/m Investments, which holds Amazon shares and has previously invested in Walmart, Target and Costco.
Walmart expects sales in the quarter ended July to increase between 3.5 per cent and 4.5 per cent.
Target and Kroger are set to report quarterly results after their larger Bentonville, Arkansas-based rival.
Amazon on Thursday reported slowing online sales growth in the second quarter and said consumers were seeking out cheaper options for purchases leading it to forecast current quarter revenue below expectations.
"Consumers are being careful with their spend, trading down, looking for lower average selling price products, looking for deals. That continued into the second quarter, and we expect it to continue into the third quarter," Amazon CFO Brian Olsavsky said on a post-earnings call.
Results from major consumer packaged goods companies including Procter & Gamble and PepsiCo also show signs of a slowdown.
P&G reported a surprise drop in quarterly sales and PepsiCo missed expectations.