Walmart
Thesis
- What is the business: own local store density with matched distribution network; earns on a scale-driven cost advantage, and monetizes the traffic again through advertising, membership fees, and marketplace services; store-fulfilled e-commerce.
- Growth drivers: store fulfilled e-commerce, advertising, marketplace and fulfillment services, membership fees, unit growth.
- Risks: Store-initiated comp is flat to negative. Capital intensity doubled. Agentic commerce cannibalizing advertising.
- Monitor: e-commerce contribution to comp against total comp
Walmart versus Costco
- Costco is the compounder with expanding margin, Walmart is building a second engine (e-commerce, advertising, marketplace) to replace an old one that stops growing (store-initiated comp).
- Costco runs SG&A at 9.2% of net sales against Walmart's 20.7%, in every one of the last three years, while paying an average US wage of $32.00 an hour against Walmart's $18.25.
- Costco added 25 net warehouses in FY2026 on a 914 base, each recent cohort annualizing $192M versus $150M for the FY2023 cohort; Walmart US added 5 net stores in FY2026.
- Costco has taken US grocery share three years running, 7.6% to 8.2%, while Walmart has given back 20.4% to 19.9%.
- Costco has lower import exposure and better tariff response capability given fewer SKUs.
- Costco has stronger price control, given fewer SKUs.
