[brudgers]

The problem for Amazon is that physical retail comes with higher costs and lower returns than its traditional business. Essentially Amazon is chasing diminishing returns and Walmart is chasing increasing returns. I'd put it this way, online sales increase Walmart's revenue per square foot and retail stores decrease Amazon's revenue per square foot because prime retail space is expensive. Even if Amazon builds out a retail store network, Walmart's basis will generally be much lower because it bought its real-estate long ago.

An anecdote to put Walmart's lead in perspective. In the early 1990's, I worked for a subcontractor on one of Walmart's distribution centers. More than a million square feet in a cow pasture strategically between Tampa, Orlando, and Ocala. Walmart probably acquired the land during the S&L crisis when commercial real-estate prices cratered. If Walmart floated a thirty year note, the title would be just about clear now. In the interim, the markets the distribution center could serve have grown massively. But the way real-estate works means that there aren't any better physical addresses than there were back then.