Amazon and Walmart Battle for Relevance as Spend Shifts to Essentials

Retail is entering its final quarter of the year. And, to date, the year’s top story has been the ongoing recalibration of priorities by consumers and retailers alike, away from flashy gadgets and trendy apparel and toward household essentials.

After all, against a backdrop of tariffs, geopolitical tensions, and a challenging macro landscape, shoppers are gravitating toward items that keep the pantry stocked without breaking the budget.

While Walmart doubles down on its “everyday low prices” strategy, Amazon is positioning itself as retail’s “everything store.” Both retail titans are chasing an increasingly fickle and cash-strapped consumer.

See also: Amazon Extends Gains While Walmart Holds Steady in Q2 Spending

Essentials Take Center Stage

Global headwinds have forced consumers to make sharper trade-offs, prioritizing must-haves over the nice-to-haves.

Data from the October “New Reality Check: The Paycheck-to-Paycheck Report” by PYMNTS Intelligence finds that today, more consumers are struggling to get by. More than 1 in 4, or 26%, had difficulties paying their bills last month, the highest share in at least two years. Overall, nearly 7 in 10 consumers are now living paycheck to paycheck, with varying degrees of difficulty in paying monthly bills. This represents the second-highest level over two years and nearly equal to the record high this summer.

Amazon’s third-quarter 2025 results, announced Oct. 30, showed a notable shift in consumers getting their groceries online, and at relatively lower price points. As PYMNTS reported, the company said online grocery sales rose strongly as more shoppers use digital channels for routine purchases. Chief Financial Officer Brian Olsavsky noted that “customers are finding more value in recurring essentials like groceries and household items.”

Amazon disclosed that, excluding Whole Foods and Amazon Fresh, it already exceeds $100 billion in gross sales of groceries and household essentials. To build on its momentum, Amazon on Wednesday announced a new concept store for Whole Foods Market where customers can shop for groceries and household essentials in one trip.

This shift toward essentials was mirrored across other earnings that showed a split economy between higher-income and lower-income consumers. It’s a narrative familiar to economists. In times of prolonged uncertainty, economic pressures often hollow out the mid-tier.

“About 70% of our members purchase volume goes to everyday essential purchases,” said Chime Financial CEO Chris Britt on his company’s Wednesday (Nov. 5) earnings call.

Related: 10 Years Later, Platforms Still Define the Connected Economy

Retail Moves From Innovation Theater to Price Discipline

For both Amazon and Walmart, the imperative is to marry low cost, high volume and convenience, capturing market share across slower-moving, lower-margin categories that nevertheless anchor frequency and customer loyalty.

The pivot toward essentials does not mean an abandonment of innovation. What has changed is where and how innovation manifests. Rather than flashy consumer-facing features, the cutting edge is moving behind the scenes: logistics optimization, automation of supply chain functions, predictive modeling of consumer demand and intelligent markdown strategies.

Payment strategies and financial services innovations are also helping retailers build competitive moats around the everyday. For example, users of Walmart de México’s digital payments app, Cashi, can now purchase products online and pay in installments without a credit card.

But it’s not just consumers. Sellers across both Amazon and Walmart’s ecosystems are also feeling the macro pinch. The PYMNTS Intelligence report “Profit Slips, Policy Shifts: Product Leaders Navigate the Crossfire” found that among mid-market companies, nine in 10 goods firms and more than 7 in 10 services firms have raised prices in response to tariffs and other macroeconomic pressures.

PYMNTS heard from Lendistry CEO Everett K. Sands about Lendistry’s new partnership with Walmart designed to embed financing directly into the retailer’s marketplace, helping sellers access capital where they do business.

And in an October release, Amazon celebrated 25 years since it opened its marketplace to third-party sellers. The company said independent sellers now generate more than 60 percent of all sales on the Amazon store and have generated over $2.5 trillion in cumulative sales since 2000.

PYMNTS covered how Amazon has reportedly raised prices more than Target and Walmart this year, possibly due to the impact of tariffs on the platform’s marketplace sellers.