Apple's iTunes set to displace Wal-Mart as largest music retailer in U.S.

Wal-Mart Stores, Inc. (NYSE: WMT) is the world's largest retailer, and the largest U.S. retailer of music. The retailer sells more CDs than anyone, but that dominance is being threatened in a paradigm shift that's been coming for years now: the digital download.

Apple, Inc. (NASDAQ: AAPL)'s iTunes online music, video and movie store will likely surpass Wal-Mart as the largest music seller in the U.S. without a single physical product being sold some time this year. Research group NPD estimates that iTunes has moved past discount retailer Target Corp. (NYSE: TGT) and consumer electronics retailer Best Buy, Inc. (NYSE: BBY)

"Digital sales were up close to 50% and CD sales were down 20 % last year ... even at half that growth rate in digital sales, Apple will in all likelihood catch Wal-Mart this year," according to NPD. As has been predicted for quite a long time, the CD, while still popular, is slowly fading away, although the transition to an all-digital music future in the U.S. is far from complete.

But, it's happening -- and with teens leading the way (but not owning credit cards in most cases), online music retailers need to make it easier for core customer groups to buy online. If every 15 year-old can go online and buy music without a credit card in the future, the transition will only see more speed.