4 min read
In This Article:
The $1 trillion battle for America’s back roads is heating up, with Amazon (AMZN) and Walmart (WMT) at the forefront.
The two retail giants are aggressively expanding their e-commerce and delivery capabilities across rural communities, hoping to unlock a largely underserved slice of consumer spending.
"Rural consumers spend more than you think," Morgan Stanley analysts said in a new report. The firm notes 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.
"Rural consumers have been on the sidelines, waiting days or even weeks for basic goods that urban shoppers get in hours," said Jerry Sheldon, vice president of research and advisory firm IHL Group. "That's about to change."
Walmart's stock is up 44% in the past year and 8% year to date as it gained further traction with inflation-weary shoppers across the income spectrum. Amazon stock has jumped 13% over the past year, but only 1% in 2025.
"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 said in an email. "They've each been citing rural expansion repeatedly on recent earnings calls. That's the signal that really matters."
Both companies are trading far above the S&P 500's (^GSPC) average price-to-earnings ratio, which requires them to continue to perform financially to keep investors' interest.
Walmart has a head start in the rural market with its vast store network, affordable inventory, and grocery dominance, Morgan Stanley said. 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.
Amazon, meanwhile, is betting that its speed, logistics know-how, and ability to innovate will close that gap. It's investing $4 billion through 2026 to beef up its rural delivery footprint to reach 4,000 rural US locations.
"Companies are always chasing growth, and this is clearly a major opportunity. While delivery costs are higher at first, as average order increases, those economics start to improve,” Sheldon added.
Read more: Is the stock market open on July Fourth?
