Black Friday and Beyond: Walmart vs. Amazon in Holiday Shopping Battle

Nov. 25, 2009— -- Black Friday is less than 48-hours away, and this year more than ever, American consumers have changed their shopping habits.

Many are spending less time standing in line, and more time buying online. E-commerce has grown 21 percent in the past year, compared to just a 5 percent increase in traditional sales. And when it comes to holiday shopping, it's price that matters most. Just ask two of the nation's leading retailers.

This shopping season, Walmart and Amazon.com are facing off in the battle for your dollars.

"Both are taking proactive steps to make sure that their businesses continue to grow," said Lee Eisenberg, the author of "Shoptimism."

In one corner, the reigning champ: Walmart. The world's largest chain store not only survived, but thrived in the recession surpassing $400 billion in sales last year. But rising profits last quarter were largely due to cost cutting, so expanding online is now even more important.

"While Walmart has had a pretty strong presence online, they haven't fired the imagination of many consumers like Amazon has," Eisenberg said.

The challenger? Cyber retail giant Amazon.com.

Two years ago, they introduced the Kindle reader, which is expected to bring in $300 million in revenue this year and $1.2 billion by 2012.

And now Amazon is trying to steal some of Walmart's thunder with a price war.

It started last month with books. When Walmart offered 10 popular titles for $9, Amazon matched them, so Walmart went two cents lower.

With electronics, both retailers now sell the X-box 360 for $199. In the toy aisle, Amazon beats Walmart's price on many popular Barbie dolls.

While retailers like Amazon and Walmart are competing toe to toe on some items, there's a significant difference between their core shoppers. The largest percentage of Walmart shoppers earn between $25,000 to $45,000 a year, compared to over $100,000 at Amazon.

Black Friday Deals at Walmart and Amazon

In the end, Amazon isn't a huge threat to Walmart, accounting for just 3.3 percent of retail sales. Nonetheless, while online sales currently make up less than 5 percent of all retail sales, analysts expect that to rise up to 15-20 percent over the next decade.

Every dollar counts, and with other retailers like Target and Sears starting to match prices, the ultimate winner could be holiday shoppers.

"This news about the price war in the end is very good for customers who are living paycheck to paycheck or in fact have no paycheck," Eisenberg said.