Walmart Pricing Study
For Wal-Mart, the Des Moines, IA, market is a return to the good old days — with just a hint of problems to come.
Experts in retail point out that Wal-Mart’s positioning is now problematic. The problem? The growth of deep discount concepts such as Aldi and Save-A-Lot seems to pose the danger of positioning Wal-Mart not as a low-price leader but, instead, as somewhere in the middle. Trapped between those offering better assortment and more services and those offering better prices, the middle is usually a rough place to be. Now as the Produce Business Wal-Mart Pricing Report rolls into Tulsa, OK, we find that Wal-Mart’s position remains strong, but we also see that Wal-Mart’s position is now under siege, everywhere.
Ethnic retailers can thrive even as Wal-Mart attacks. Such is the case in Lake Worth, FL, where the 24th edition of The PRODUCE BUSINESS Wal-Mart Pricing Report has rolled into town.
After ten years of studying Wal-Mart’s produce pricing and the impact it has on the pricing policies of other chains in cities where Wal-Mart operates, the Produce Business Wal-Mart Pricing Report has rolled into Savannah, GA, and something that has never happened before has now happened. large scale, mainstream supermarket chain, namely The Kroger Co., beat out Wal-Mart, coming in 2 percent lower than Wal-Mart on produce pricing…. well, sort of.
In this the 22nd iteration of the Produce Business Wal-Mart Pricing Report, we return to Dallas, TX, which we last visited back in October of 2003, and we find that much has changed and much has not.
Wal-Mart is used to pushing independents around. New York Metro may have a lesson to teach the behemoth from Bentonville.
In Philadelphia, Wegmans gives Wal-Mart a true run for its money, while Giant and Genuardi's apply pressure with their Ahold and Safeway loyalty card programs.
By and large, however, mainstream supermarkets have not so much attempted to compete with Wal-Mart for its core lower income, paycheck-to-paycheck shoppers. They have, for the most part, simply decided to get out of the way. We would add one caveat: In city after city, we are now seeing more and more that the loyalty card programs are becoming the weapon of choice supermarkets are wielding to compete with Wal-Mart.
Some believe that the future of American retailing can be glimpsed in Phoenix, AZ. So we traveled down to Phoenix for the 19th iteration of our Wal-Mart Pricing Study, seeking not just our usual quest - the low price champion in one city - but also seeking enlightenment as to what the future might bring for retailing all across the country.
With the Produce Marketing Association (PMA) Fresh Summit Convention and Exposition taking place in Orlando, FL, this month, we thought we would bring the 18th iteration of the Produce Business Wal-Mart Pricing Study to the theme-park capital of America and see how competitive a market it is. The answer: not very.
Einstein said, "Things should be made as simple as possible, but not simpler." And now, in the 17th iteration of our Wal-Mart Pricing Reports, we have discovered a simple answer to a complex question. For this month, we expand our pricing study to Los Angeles, and we include for the first time in our analysis a store from the U.S. division of Tesco, Fresh & Easy.
This marks our 15th Wal-Mart Price Report. If you look strictly at the numbers, you wonder why Wal-Mart, big as it is, isn't bigger. In a city such as Kansas City, if you just walk into the store and buy produce, three of the big competitors - Dillon (owned by Cincinnati, OH-based Kroger), Hen House and Hy-Vee - seem to pay close attention to each other's produce pricing - and none to Wal-Mart's.
Despite generous warnings given by Wal-Mart's roll-out across the United States, Canadian supermarkets are, mostly, making the same mistake their U.S. counterparts did. They are allowing Wal-Mart to establish a reputation as the low-price leader on fresh produce.
Since everyone was so uncompetitive when we were last in Portland, OR 31 months ago and they have had that same amount of time to strategize a way of fighting Wal-Mart, we wanted to see what had transpired on the price front in 31 months. The answer: Virtually nothing.
With this iteration of the Produce Business Wal-Mart Pricing Report, we mark the visit to our 12th city. We've previously gone from east to west and north to south; this time we go straight up to the Mile High City, Denver, CO. And it isn't just the mountains that are lofty in these environs.
As the Produce Business Wal-Mart Pricing Report rolls into Atlanta, home of this year's PMA convention, we can say that the findings are settling into a pattern. Although a few retailers address Wal-Mart's pricing in their promotional efforts, such as ad pricing, and a few chains view themselves in fierce competition on prices, most chains and independents don't try so much to compete with Wal-Mart as to ignore it.
With this iteration, the Produce Business Wal-Mart Pricing Report reaches several milestones. First, we hit double digits. Yes this time we journey to Houston, TX, for our tenth city to be surveyed and analyzed. Second, as we selected Houston as our target subject this month, it means for the first time we are returning to a state to look at a second city. Third, and most important, for the first time ever a supermarket carrying a full line of product beat out the Wal-Mart Supercenter as pricing king.
Wal-Mart does its usual bulldozer when it comes to pricing against two strong independent supermarket chains. But it stumbles when it meets two limited assortment concepts. Is this the picture of one possible future?
From the Atlantic to the Pacific, Produce Business has crisscrossed the nation searching for the retailer who has found the way to present real competition to the phenomenally successful Wal-Mart Supercenter. In this, the eighth region covered by the Produce Business Wal-Mart Pricing Report, we head into Detroit where we may have found not one, but two real competitors to the Wal-Mart Supercenter concept.
Our Wal-Mart pricing report was brought to Palm Springs to identify precisely how the major national chains - Safeway, through its Vons division, Kroger, under the Ralphs banner, and Albertson's, with stores under its own name - are fighting back. We also surveyed an upscale concept, Jensen's, just to set another extreme on the scale. For the major supermarket chains, this is a crucial battle.
How to battle Wal-Mart? In markets ranging from Connecticut to Salt Lake City to South Florida to Dallas to Portland, OR, most chains had no identifiable strategy for being price-competitive with Wal-Mart. In Round VI of our continuing series, Produce Business compares pricing at Wal-Mart Supercenters with various chains in Phoenix, AZ.
In this issue, we roll into the Dallas metroplex looking for a new low-price leader. Dallas is a crucial market with a unique set of competitors. So we expanded our study to encompass six different retailers. We included a strong regional competitor - Brookshire's - plus representatives of the big three supermarket chains; an Albertson's, a Kroger and a Tom Thumb, owned by Safeway. In addition to the Wal-Mart Supercenter, we also studied pricing, for the first time, at a Wal-Mart Neighborhood Market.
With this piece, we roll down to South Florida and the far southeast end of Wal-Mart's ever-growing national footprint. Our findings: the competitive situation in Salt Lake City seems to be an aberration. Like the northeast, Wal-Mart in South Florida is not merely the lowest priced, but is so low-priced as to call into question the long-term viability of competitors.