The “Thucydides trap” refers to the notion that war between an established power and an up-and-coming power is inevitable. It derives from Thucydides’s ancient classic, The Peloponnesian War. I’ve been critical of the idea as it pertains to the inevitability of war between the United States and China but there’s a battle between an established power and an up-and-coming power that’s real and going on right now. It’s the battle in the retail space between Wal-Mart and Amazon. Investor’s Business Daily reports:
Wal-Mart, the largest retailer in the world, is showing that an elephant can dance. Besieged by Amazon’s online dominance and ability to deliver goods at super-low prices overnight, has responded to the challenge.
Unlike other brick-and-mortar retailers like JCPenney (JCP), Sears (SHLD) and other former stalwarts that themselves were never able to respond to Wal-Mart’s challenge 30 years ago, the Bentonville, Ark.-based discounting giant has moved aggressively into e-tailing.
Walmart said its e-commerce business is set to expand by 40% next year as it goes toe-to-toe with Amazon. It will boost its online grocery pickup sites by 100% or more in the coming year, while hiring an army of 2,000 “specialists” to keep on top if its burgeoning website.
Last year, Wal-Mart put up $3 billion for Jet.com, an online retailer whose “smart-cart” checkout technology has helped Wal-Mart boost its e-sales by 60%.
This is only part of the future that Wal-Mart is building. Soon, it hopes to keep families’ pantries stocked, just as Wal-Mart stocks its own shelves, using enhanced pickup and delivery and letting customers use their cellphones to do everything from returning goods to ordering.
The only question I have about this is which is the “established power” and which the challenger? It would seem obvious. Despite the hype over Amazon Wal-Mart does five times the amount of retail sales that Amazon does and its earnings on its retail sales are better. Amazon isn’t even among the top five retailers. However, until very recently nearly all of Wal-Mart’s sales were in its brick-and-mortar stores. The retail behemoth is going toe-to-toe with Amazon on its own turf. It’s certainly acting like a challenger.
Don’t count Wal-Mart out.