Retail giant Walmart (WMT) is going head-to-head with e-commerce rival Amazon (AMZN) to capture the $1 trillion rural U.S. shopper market.
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Both have recently expanded their delivery offerings to rural America aiming to unlock a huge underserved piece of consumer spending and demand.
Amazon, for example, said it plans to invest $4 billion to expand its delivery network in small towns across the U.S. The investment will grow its rural network footprint to over 200 delivery stations.
“Rural consumers spend more than you think,” Morgan Stanley (MS) analysts said in a new report. It states that the US rural market represents a $1 trillion opportunity in personal goods consumption, with rural households spending roughly 95% of what urban consumers do.
Nearly 45 million Americans live in rural counties. According to the Bureau of Labor Statistics’ 2023 Consumer Expenditure Survey, excluding autos and gas, rural consumers account for around one-fifth of US personal goods consumption.
Aggressive Investment
“What makes the rural push so crucial right now is that both Amazon and Walmart are ramping up investment at the same time, more aggressively than ever before,” Morgan Stanley’s Simeon Gutman told Yahoo Finance. “They’ve each been citing rural expansion repeatedly on recent earnings calls. That’s the signal that really matters.”
According to Morgan Stanley, Walmart has a head start in the rural market with its vast store network, affordable inventory, and grocery dominance. Its same-day delivery now covers 93% of the US population, up from 76% two years ago, and is expected to reach 95% by the end of 2025.
Is WMT a Good Stock to Buy Now?
On TipRanks, WMT has a Strong Buy consensus based on 28 Buy and 1 Hold ratings. Its highest price target is $120. WMT stock’s consensus price target is $110.07 implying a 11.97% upside.
