Walmart leads pricing survey with Target on its tail
All retailers are taking price increases where they can these days, especially in food, but the pace of increases at Walmart has slowed, and its price gap relative to most competitors has widened, according to the most recent pricing survey conducted by Credit Suisse.
The firm looks at prices monthly on a basket of 60 comparable items in such categories as health and beauty, food and household products at seven mass-channel retailers in the Dallas/Fort Worth and Chicago markets. The findings of the survey are never in doubt with Walmart offering the lowest prices, but what is interesting is the degree of price separation between it and such key competitors as Target and Kroger.
According to the firm, all retailers raised prices on a year-over-year and month-to-month basis in October with expect for Kroger. The grocer’s prices declined in October when compared with September but were still higher when compared with the prior year.
“Retailers have been attempting to pass through inflation for the better part of 2011, and October was the clearest indication of this to date despite a consumer that continues to be strained,” according to Credit Suisse, “In addition, Walmart widened its price gap versus other retailers to 16.9% from 16% in September, but it remains below its historical average of 18.4%. The widening that happened in October, should it continue, could be a possible indication that the company is recommitting in earnest to accelerating further its price leadership.”
That is certainly something Walmart senior executives have been talking about, whether in meeting with investment analysts or financial firms. Demonstrating a higher degree of price separation is seen as key to fulfilling the retailer’s brand promise of every day low prices and engendering the type of shopper loyalty that will help accelerate same-store sales throughout 2012. However, such key competitors as Kroger and Target are not readily ceding the high ground to Walmart. In October, the basket price at Target was only 1.9% higher in the combined markets while Kroger was 8.9% higher in the Dallas/Fort Worth market.