More studies validate low-price leadership
Week in and week out, Walmart wins on the pricing front with the biggest unknown being the magnitude of the spread between it and competitors, several reports out this confirmed.
Deb Weinswig at Citigroup looks at prices in three U.S. markets every two weeks and her most recent assessment showed Walmart beating Kroger by 12.1%, Safeway by 17.4%, Supervalu by 20.6% and Target by 4.8%.
“Consistent with our prior survey, we believe that the supermarkets in our coverage universe are focused on keeping pace with Walmart’s price investments as they continue to fight for share of the food retail pie, while Target works to gain its footing on price in food,” according to Weinswig. “We expect price competition to continue to heat up in 2012, as Walmart has committed to investing more aggressively in price this year.”
Deutsche Bank analyst Charles Grom also conducts a regular pricing survey and like Weinswig his data reveals general trends about food price inflation and the gap between Walmart and traditional grocers.
For example, his June survey showed “Walmart continued its reign as the low price leader,” however the gap with Kroger had narrowed somewhat in June to the lowest level since last year.
“We see evidence that Kroger continues to reinvest cost savings into price,” Grom said. “Notably, Walmart’s discount to Kroger narrowed to 7.7% in June from 9.5% in March and is below the 9.3% average since July 2011.”
Walmart also wins the pricing battle online, according to a study by Kantar that compared supercenter prices with those of Amazon.com and Walmart.com. The firm analyzed prices on 36 national brand items in the edible grocery, non-edible grocery, health and beauty and general merchandise categories.
“Despite the increasing competition from online, study results indicate that Walmart supercenter’s overall basket is the least expensive of the three outlets,” according to Kantar.
The basket of items as Walmart.com was 7% more expensive and Amazon.com was 20.5% more expensive than the supercenter.
“The study suggests that shoppers fulfilling weekly grocery needs should look to receive a better basket price at a Supercenter compared to these leading online venues,” said Robin Sherk, a senior analyst at Kantar Retail.