By Business Insider From Newsmax

Wal-Mart Stores Inc.’s lackluster sales outlook and dismal earnings reflect a “terrifying new reality” for American retailers, Business Insider warns.

“For retail rivals, Walmart’s struggles are not cause for celebration. Instead, they reveal a swiftly changing retail landscape where few can keep up,” BI’s Kate Taylor explains.

And there’s a cruel irony behind retailers’ quest for online dominance: it eventually forces more brick-and-mortar stores to close.

“Even if retail giants are able to turn business around by growing ecommerce sales, customers should not be surprised if more closures are on the horizon as the retail industry adjusts to this seismic shift,” Taylor explained.

“Just as mall traffic has decreased (Fung Business Intelligence Centre estimates that the average American now visits a mall three to four times a year, as opposed to five to six times a few years ago), visits to big-box retailers are also dropping,” BI reported.

When one store closes, it sets off a domino effect of closures. If a mall anchor, such as Macy’s or Sears, shuts down, it can be difficult to find another tenant to replace them, according to Howard Davidowitz, chairman of Davidowitz & Associates, a national retail-consulting and investment-banking firm, BI reported.

So after spending billions on its Web operations to take on rival Amazon.com Inc., the last thing Wal- Mart wanted to tell investors was that online sales momentum was slowing.

Yet the world’s biggest retailer said e-commerce sales rose 8 percent in the fiscal fourth quarter ended Jan. 31, for a fourth straight period of decelerating growth. Growth has gone from 17 percent in the first quarter, to 16 percent in the second and 10 percent in the third. The numbers exclude the impact of currency swings.

Wal-Mart said the slowdown was due to weakness in China, the United Kingdom and Brazil. It does not break out figures for individual markets, including the United States.

The numbers suggest Wal-Mart is slipping further behind online leader Amazon.com, whose North America sales grew 24 percent and international sales grew 22 percent in the fourth quarter on constant currency terms.

“It’s definitely a challenging trend,” Keith Anderson, vice president at e-commerce analytics firm Profitero, told Reuters. “The really troubling aspect of it is the fourth quarter is the fourth quarter. It’s the holiday period.”

Amazon outstripped industry-wide U.S. online growth in the fourth quarter, which was 14.7 percent, according to Department of Commerce data. Amazon now has a 23.7 percent share of the U.S. online market, compared with Wal-Mart’s 2.5 percent, according to retail consultancy Conlumino.

When asked about bridging the gap with Amazon, Wal-Mart e-commerce head Neil Ashe told reporters he was focused on “building the customer relationship” through the retailer’s mobile app, services like grocery pickup, and by growing assortment. “The customer is reacting positively to that,” he said.

But Wal-Mart’s slowing growth also highlights broader challenges of logistics and price competitiveness, including in the key U.S. market, Anderson said.

According to a recent Profitero survey of 2,461 products, Amazon had lower online prices than both Target and Wal-Mart across six product categories. Anderson says Amazon also has the upper hand on selection and delivery times.

Wal-Mart contests that it is more expensive, saying its own survey of a wider assortment of items shows it has the same or lower price than leading online competitors four out of five times.

Wal-Mart has spent aggressively to become more efficient, earmarking $2 billion over two years to build out its e-commerce infrastructure, including on dedicated online fulfillment centers that can sort and ship packages at a lower cost.

Keeping pace with Amazon will not be easy. The Seattle-based retailer spent $4.6 billion on capital expenditure last year, and continues to expand its Prime program, which is estimated by some analysts to have 50 million members worldwide.

Despite Wal-Mart’s spending, the company still is falling short of Amazon on price and selection, Guru Hariharan, chief executive officer of research firm Boomerang Commerce, told Bloomberg.

During the holidays, Amazon was able to beat Walmart.com in key areas like electronics, toys and housewares, and Target Corp. also sold items for cheaper in some categories, he said. And Amazon had a significantly bigger selection than Walmart.com in every category Boomerang tracked.

“Why would I ever go to Walmart.com and shop there when I have lower prices on Amazon and a much higher assortment on Amazon?” Hariharan said. “Wal-Mart has to do some soul searching and figure out what it stands for. They aren’t going to be able to compete on lowest price and biggest selection anymore with Amazon.”

One area Wal-Mart does have an advantage in is groceries, analysts said. The company has expanded its online grocery shopping to more than 150 locations in at least 20 markets in the U.S., letting customers order online and pick up at the store without leaving their cars.

“If there is one piece Walmart knows in the U.S., it is grocery, so I think that is a logical move forward,” said Robert Drbul, an analyst with Nomura Securities.

But other competitors aren’t far behind. Amazon is testing its own grocery delivery service, which may use drones, and Google may even enter the market with its self-driving cars, Hariharan said.

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