Amazon and Walmart, two giants of commerce, have been faced with a new challenge: their growth has slowed down in 2025.
After years of upward trends, their latest reports say that consumers have changed their buying habits and are spending much less on products and more on services, housing, and healthcare, and then… the tariffs.
The last aftershock of the Pandemic
The warning has been for both: Amazon and Walmart took advantage for a long time of the shift towards digital commerce, driven mainly by the Covid-19 pandemic, when we all got used to shopping with just a few simple clicks.
But of course… It’s no longer a pandemic, and we’re in a time of significant economic inflation, and these two giants have noticed it. The first quarter has been a bit disastrous for both, Amazon grew by just 3.7%, and Walmart by 3.2%. Of course, this has A LOT to do with inflation, but they’re pretty far from the 10% and 5% (respectively) they used to have.
What’s happening with Amazon and Walmart?
Well, the reason for this economic downturn is very clear: the factors that boosted sales during COVID-19 no longer exist: digital shopping, government aid, much less competition….
Now that we’ve managed to get back to normal, many shoppers have reconsidered their spending and are deciding to spend more on services, health and housing than on personal consumption.
Inflation and the tariffs
Of course, while inflation has eased somewhat in 2025, global tariffs continue to drive up prices for products like clothing and furniture. The new policies from Trump and his administration are forcing consumers to prioritize essential spending over buying any luxury.
And here’s where “the war” arises: for Amazon, the challenge is to defend its leadership in key categories without losing profitability, but for Walmart, this moment could be the chance to strengthen its image as the best choice for price. Who will win the battle?
Is it a temporary or structural change?
This shift is adapting to the new shopping habits of consumers, as the “old normal” has returned and competition is fierce (not just in these sectors, of course), so Amazon and Walmart are officially in a fight.
Fewer products, more services
That’s right, and although Amazon still dominates online shopping and Walmart leads in groceries, both are losing part of the consumers’ “total spending portfolio”. According to recent data, total household spending on Amazon fell from 3.4% to 3.3%, and Walmart’s from 2.8% to 2.6%.
These declines are not because they’re losing customers in their sectors, but because Americans are allocating more money to other areas: rent, health and entertainment.
This is not new and has been happening since back in 2021!!
Walmart gains ground in discretionary spending
Discretionary spending (clothes, furniture or electronics) has traditionally been Amazon’s turf. However, this year Walmart surprised with an increase in its share of this type of spending, reaching 6.4% in the first quarter. Amazon, meanwhile, dropped back to 23% from 26% in the previous quarter.
Many might think this change could be seasonal, but it also reflects that consumers are increasingly prioritizing price and perceived value. With the Trump administration’s tariffs pushing prices up, Walmart seems well positioned to capture cost-conscious shoppers.
What can they do?
Given the uncertain future ahead, there’s little we can say, but surely they’ll end up adjusting prices to remain competitive (even if the pressure from tariffs won’t ease), and they’ll probably diversify their business into areas that are growing the most… But that’s predicting too much in a market as volatile as this. We prefer not to take sides!
The heavyweights of American commerce are in “trouble”, will they be able to survive this growth slowdown? Will they adapt or… will they prefer to take the risk?
Carol McDaniel is a dedicated and results-driven professional with 5 years of experience and US News. Known for her strong problem-solving skills and collaborative mindset, Carol has built a reputation for delivering high-impact results across diverse teams and projects.
Throughout her career, she has demonstrated expertise in 2 core skills or areas, e.g., client relations and project coordination, and is passionate about continuous learning and meaningful contribution. Carol thrives in dynamic environments and consistently brings professionalism, adaptability, and a focus on growth to every role she takes on.