The holiday season is right around the corner, and considering the state of the economy, it's not looking very jolly. Top retailers are showing signs of pressure, and their stocks are feeling the heat.

Despite the gloomy outlook, consumers will still be spending this season. Companies are giving tepid projections for what is usually their best quarter, but some will fare better than others. Costco Wholesale (COST 1.01%) and Amazon (AMZN -0.15%) look well-positioned to win this holiday season.

Cheaper than anywhere else

There's a very simple reason Costco should be a winner this season, and it's the same reason that it has oupaced so many other retailers throughout this inflationary period -- it offers the cheapest prices. That's a model for success in any environment, and it becomes even more important when customers are watching their wallets. 

Costco marks up prices by a razor-thin margin and makes most of its profits from the fees that customers pay for annual memberships. Consider Costco's gross margin as compared with that of Target and Walmart -- it's about half. That adds up to huge savings for shoppers.

COST Gross Profit Margin (Quarterly) Chart

COST Gross Profit Margin (Quarterly) data by YCharts

Costco actually benefited from inflation because more people shopped at its warehouses. With the extra spending that goes into the holidays, Costco should benefit as well. 

That's also important as Costco is finally starting to feel the crunch. Sales growth was still higher in the fourth quarter (ended Aug. 28), but monthly sales are beginning to show a deceleration. An uptick in holiday spending should boost revenue growth.

Holding on to its market share in e-commerce

Amazon stock sputtered after its third-quarter earnings report last week. It reported solid sales growth but offered weak guidance for the key holiday season of 2% to 8% revenue growth year over year. It attributes the slowdown to inflation, rising costs, and the strong dollar's impact on foreign currency. 

However, as compared to other retailers, Amazon is still the leader by far in e-commerce. It's heavily focused on creating value for its customers, and with its market-leading e-commerce features, and in particular the Prime program, it's well-positioned to meet customer needs this holiday season.

Consider Amazon's total e-commerce market share:

U.S. company e-commerce share.

Amazon e-commerce market share. Image source: Statista.

Throughout the pandemic, when e-commerce sales made a meteoric acceleration, Amazon held its own against the many companies that souped up their e-commerce networks to generate online sales. It may be struggling to grow now, but it's the go-to source for hundreds of millions of holiday spenders.  

Amazon may face trouble from customers heading toward brick-and-mortar favorites like Costco. But a significant percentage of consumers are reliant on e-commerce, and Amazon is likely to get a huge share of those dollars.