Wal-Mart Pricing Report: Round I

Wal-Mart Pricing Pummels Local Competitors

Produce pricing analysis in one Connecticut region reveals Wal-Mart’s low-price reputation applies to its produce department as well.

Wal-Mart continues to bulldoze new strategic positions across the United States at a record pace. The crucial issue for supermarkets afflicted buy the Wal-Mart Supercenter onslaught is how to compete.

Grocery is a local business, and Connecticut is about as far from the base of Wal-Mart, headquartered in Bentonville, AR, as it gets. How do the supermarkets lustered around the Wal-Mart Supercenter in North Windham, CT, hold up on produce pricing? Are supermarket executives going head-to-head with Wal-Mart in a price-cutting war item by item, raising the high price / big sale strategy to new levels in order to lure customers, or are they throwing their hands up in the air when it comes totaling on the high-volume, operationally savvy, low-cost king?

PRODUCE BUSINESS went undercover to rival produce departments in this targeted region to conduct a snapshot pricing analysis.

The Players

Wal-Mart Supercenter in North Windham, CT, 30 miles east of Hartford, competes with both Shaw’s and Super Stop & Shop in neighboring Mansfield, all within a 10-mile radius of each other.

BJ’s Wholesale Club is also positioned in Willimantic, but the role it plays in the pricing picture is not included in the analysis here because the wholesale format and item pack sizes did not allow for a direct product pricing comparison with the other stores.


To insure the most accurate and balanced analysis, PRODUCE BUSINESS selected some 75 produce items in a wide-range of categories to study on a single day in April. Only comparable items and varieties carried in all four stores are included in the statistical analysis.

The goal was to find as many items with the exact same pack-size, branded quality as possible. A bulk item needed to be priced in pounds at all stores, or conversely by the unit, for it to be included. If a store had a sale where a consumer was offered a discounted price on a single item if they bought more than one, it was noted, but the price for the single item was used in the statistical analysis.

If the supermarket advertised a lower price with a consumer loyalty card and a higher one without it, the loyalty card price was used in the calculations.

In other cases, such as with bananas, the brands may have been different, but the product similarity was almost exact. Product with noticeable variation in quality or size, such as strawberries and cauliflower, were eliminated from the numerical calculations so as to not distort results.

Pricing Mystique Unveiled

Wal-Mart was consistently cheaper on an item-by-item basis, and in some cases, the pricing gap was more like a crater. Overall, Big Y averaged 36 percent higher on the items than Wal-Mart; Shaw’s came in at 34 percent higher, and Super Shop & Stop was 23 percent higher. What does that mean in terms of dollars? The total cost of all the items compared equaled to $58.52 at Wal-Mart. For those same items, the total bill came to $79.66 at Big Y. Shaw’s slipped in just under at $78.60, while Super Shop & Stop’s total dollar amount was $71.92.

One consideration is a consumer’s bent to choose an item on sale at the expense of one she originally had other shopping lists. In other words, Big Y might be expensive on melons, an average 44 percent over the Wal-Mart price, but such a point becomes moot in our pricing analysis, if the consumer chooses to ask by the melons that day and instead take advantage of the “Buy One, Get One Free” special on strawberries. Produce has an impulsive element. A big sale might encourage a consumer to purchase an item not even on their shopping list.

Wal-Mart Supercenter vs 3 Chains
Price Comparison — N. Windham, CT

May 2002 – Prices Available To The General Public
Produce Item Price Regular
% Over
% Over
% Over
Apples (avg. price) $1.02 $1.44 41% $1.44 42% $1.19 17%
• Empire – per lb. $0.97 $1.39 43% $1.29 33% $0.99 2%
• Fuji – per lb. $0.97 $1.69 74% $1.49 54% $1.49 54%
• Granny Smith – per lb. $1.17 $1.18 1% $1.49 27% $1.49 27%
• Red Delicious – per lb. $0.97 $1.49 54% $1.49 54% $0.79 -19%
Bananas – per lb. $0.48 $0.59 23% $0.59 23% $0.49 2%
Grapes (avg. price) $1.48 $2.24 51% $2.14 45% $1.99 34%
• Red Seedless – per lb. $1.48 $1.99 34% $1.99 34% $1.99 34%
• Thompson – Seedless – per lb. $1.48 $2.49 68% $2.29 55% $1.99 34%
Jarred Fruit – 26 oz. $2.98 $3.99 34% $3.99 34% $3.99 34%
Lemons – each $0.33 $0.69 109% $0.69 109% $0.60 82%
Limes – each $0.25 $0.50 100% $0.50 100% $0.50 100%
Melons (avg. price) $2.43 $3.49 44% $2.79 15% $3.24 34%
• Cantaloupe – each $1.88 $2.99 59% $2.59 38% $2.49 32%
• Honeydew – each $2.97 $3.99 34% $2.99 1% $3.99 34%
Nectarines – each $1.77 $2.99 69% $1.99 12% $2.99 69%
Pears (avg. price) $1.14 $1.39 22% $1.42 25% $1.19 4%
• Anjou – per lb. $0.97 $1.49 54% $1.89 95% $1.19 23%
• Bartlett – per lb. $1.17 $1.18 1% $0.99 -15% $1.19 2%
• Bosc – per lb. $1.28 $1.49 16% $1.39 9% $1.19 -7%
Pineapple – Del Monte Gold – each $2.79 $3.99 43% $3.99 43% $4.49 61%
Tomatoes (avg. price) $1.74 $2.49 43% $2.49 43% $2.29 32%
Plum – per lb. $1.37 $1.69 23% $1.99 45% $1.49 9%
Grape 1pt Santa – each $1.97 $2.69 37% $2.49 26% $2.69 37%
Vine – per lb. $1.88 $1.78 -5% $2.99 59% $2.69 43%
Watermelon – Seedless – per lb. $0.48 $1.19 148% $0.79 65% $0.99 106%
Asparagus – per lb. $1.98 $2.99 51% $1.79 -10% $2.49 26%
Bell Peppers – Green – per lb. $1.27 $1.99 57% $1.79 41% $1.29 2%
Broccoli Crowns – per lb. $1.27 $1.49 17% $1.29 2% $1.69 33%
Cabbage (avg. price) $0.54 $0.54 0% $0.84 56% $0.59 9%
• Green – per lb. $0.44 $0.49 11% $0.39 -11% $0.49 11%
• Red – per lb. $0.64 $0.59 -8% $1.29 102% $0.69 8%
Eggplant – per lb. $1.27 $0.98 -23% $1.59 25% $1.29 2%
Lettuce (avg. price) $1.52 $2.49 64% $2.49 64% $1.49 -2%
• Romaine – each $1.36 $2.49 83% $2.49 83% $0.99 -27%
• Iceberg – each $1.68 $2.49 48% $2.49 48% $1.99 18%
Onions (avg. price) $0.98 $0.99 1% $0.89 -9% $0.84 -14%
• White – per lb. $0.98 $0.99 1% $0.89 -9% $0.99 1%
• Red – per lb. $0.98 $0.99 1% $0.89 -9% $0.69 -30%
Packaged Salads (avg. price) $2.33 $3.49 50% $3.79 63% $2.89 24%
• Caesar Kit – 7.5 oz pkg $2.68 $2.99 12% $3.29 23% $2.99 12%
• Romaine Hearts – 18 oz pkg $1.98 $3.99 102% $4.29 117% $2.79 41%
Idaho Potatoes – Bulk – per lb. $0.50 $0.99 98% $0.89 78% $0.79 58%
Idaho / Russet Potatoes – 5 lb. bag $2.27 $2.99 32% $3.29 45% $3.49 54%
Squash (avg. price) $0.96 $1.39 45% $1.14 19% $1.29 34%
• Acorn – per lb. $0.96 $1.49 55% $1.29 34% $1.29 34%
• Butternut – per lb. $0.96 $1.29 34% $0.99 3% $1.29 34%
Sweet Potatoes – per lb. $0.25 $0.99 296% $0.79 216% $0.99 296%
Tofu Nasoya – 15 oz pkg $1.78 $2.29 29% $2.69 51% $2.99 68%
Veggie Dip – Marzetti – 15.5 oz pkg $2.68 $2.99 12% $3.29 23% $2.99 12%
Veggie Slices – Galaxy – 8 oz pkg $2.98 $2.69 -10% $2.99 0% $2.99 0%
MARKET BASKET $58.52 $79.66 36% $78.60 34% $71.92 23%

Further, the consumer’s total ring is going to be influenced not only by which items she loads in her cart that day but by the number of units of each brought to the register. To counter this bias, Produce Business created three different sample shopping lists with 11 to 14 varied items and different units of each and then compared the prices among the stores, as well as the total basket dollars. In all three scenarios, the total dollar basket was significantly lower at Wal-Mart than at the three conventional supermarkets.

Even when several products with particularly huge price differences were eliminated from the shopping list in order to minimize the risk of biasing conclusions, the other stores were still significantly more expensive than Wal-Mart.

Bottom Line

North Windham’s Wal-Mart Supercenter clearly did not have the category SKU variety of the other area stores. However, Wal-Mart’s produce selection, excluding a scant organic offering, stacked up in quality and freshness when compared to the competition.

The bottom line: a consumer shopping at the North Windham, CT, Supercenter on the observed day would end up with fresh, quality produce and substantially more money in his or her bank account than if he or she had done the same shopping at one of the other three supermarkets.

Many supermarkets have posited that produce can be used as a tool for fighting supercenters. But if the quality isn’t obviously much better and the price is clearly much more expensive, the challenges for differentiation in other respects become greater.

EDL Pricing Plus

Wal-Mart built its reputation on Every Day Low Price (EDLP), a strategy that eschews sales in exchange for keeping all prices economical on an everyday basis. High/low, on the other hand, keeps regular margins beefy to subsidize deep sales. Coming into this study, one of the hypotheses was Wal-Mart would be economical overall but would get beaten out on sale items, thus leaving consumers confused auto which store offered the best value proposition

If the quality isn’t obviously much better and the price is clearly more expensive, the challenges for differentiation in other respects become greater.

A few strong sales dispersed among the supermarkets occasionally beat out Wal-mart on particular items. The price differential to Wal-Mart on these sale items was at its greatest, 30 percentage points. Meanwhile, Wal-Mart was beating conventional stores on many items with dramatic percentage point differences. Even when a supermarket put an item on sale, Wal-Mart often came in lower.

In this encapsulated study, Wal-mart went beyond the EDLP and was experimenting with the most effective ways to sell produce. The strategy involved the prominent use of an old supermarket word: “SALE.”

Wal-Mart was banging out sweet potatoes with a large display upfront touting, “On Sale. Now 25 cents per pound. Was 78 cents per pound.” Mimicking a common supermarket approach, Wal-mart did the same with fresh corn in the husk with an eye-catching sign above a front-and-center display, “Was 33 cents each; now 20 cents each.” Consumers couldn’t miss a large promotion on jumbo yellow cooking onions, on sale for 37 cents per pound. down from 68 cents per pound.

Also up front, a secondary display for a pack, 12 ounce. Garden Sweetest brand round tomatoes alerting consumers “SAVE: was 98 cents, now 88 cents each.” A consistency problem arose when the same Garden Sweetest packs were merchandised for $1 each next to the other tomato varieties. While Super Stop & Shop wasn’t offering a similar product in that pack size that day, at Big Y, the same pack size of Garden Sweetest brand tomatoes was $1.69, more than double the Wal-Mart price. At Shaw’s, the Garden Sweetest brand tomatoes were even higher at $1.79.

Price Gaps and Craters

Pricing disparity on particular bulk items was glaring. Even on sale, Shaw’s was selling sweet potatoes at a 216 percent premium over Wal-Mart. While Big Y and Super Shop & Stop advertised a whopping 296 percent higher retail than Wal-Mart.

There wasn’t much doubt about the best deal for seedless watermelon, cut inhale and quarter portions, shrink-wrapped and sold by the pound at all four stores. At Big Y, the price tag for seedless was 148 percent more than Wal-Mart. Shaw’s was more competitive at a 65 percent mark up, and Stop & Shop was selling seedless watermelon at a 106 percent premium over Wal-Mart.

Wal-Mart also knocked out the competition by offering cantaloupe at $1.88 each or 2 for $3, a sales technique commonly associated with supermarkets. If the consumer preferred honeydew melon instead, the results still favored Wal-Mart.

Apple prices fluctuated by variety. Super Stop & Shop’s big sale on Red Delicious for 79 cents per pound with a loyalty card and $1.49 per pound without a loyalty card was better than Wal-Mart that day. In the end, if one averaged apple prices for several varieties at each store, Super Stop & Shop was still 17 percent higher than Wal-Mart, while Big Y and Shaw’s were 41 percent higher.

Wal-Mart came in with red and green seedless grapes at $1.48 per pound. In a secondary display, green seedless grapes were priced differently at $1.97 per pound, but the store manager apologized for the confusion and at least gave this shopper the lower $1.48 price. Either way, Wal-Mart out-priced the supermarkets on grapes. Averaging green and red seedless grape prices, Big Y was up 51 percent from Wal-Mart; Shaw’s 45 percent; and Super Stop & Shop at 34 percent.

A category like lettuce is interesting to assess. For the consumer who preferred bulk to packed varieties, Super Stop & Shop’s price on romaine undercut Wal-Mart by 27 percent. So even if you averaged in its 18 percent markup on iceberg, Super Stop & Shop still had a narrow lead over Wal-Mart on bulk lettuce that day, while both Big Y and Shaw’s averaged 64 percent more on bulk lettuce than Wal-Mart.

Packaged salads were a different story. Super Stop & Shop’s average percent over Wal-Mart in this category was 24 percent. For Big Y, it was 50 percent, and for Shaw’s, it was 53 percent.


Big Y narrowly trumped Shaw’s in this snapshot study, with the overall highest pricing average for all the items studied on that particular day. In contrast, it sported some incredible sales in the circular. The leadoff deal at the top of the circular hyped, “Buy One, Get One Free, 1-pound-package Driscoll’s Strawberries, Save $4.99.” But no strawberries of any kind were to be found on the retail display, which also played up the special with prominent signage.

Big Y ran out of stock, apparently not prepared to handle the volume it created by out-pricing Wal-Mart and its there area competitors. In some instances, in-store signage at Big Y did not relay the sales from the circular. For example, the circular advertised 30 percent off on all Lightlife products, but in the soy/tofu area, there was no signage to highlight this bargain on several Lightlife brand items. Lightlife Smart Dogs were labeled $3.99 on the shelf, the same price as Shaw’s. But Wal-Mart excited consumers with a $2.88 price tag.

It is worth pointing out pricing produce at the Shaw’s in Willimantic that day was headache-inducing. Items including eggplants, cabbage, packaged Shaw’s brand spinach and vine ripe tomatoes had no pricing signage or product stickers, or the signs did not line up with the proper product. This is a problem because even if the product is a bargain, the consumer may not realize it and walk right by.

Shaw’s had a 2 for $3 special on 16 ounce Cal-Sun strawberries. The only problem: all the Cal-Sun strawberries displayed with the sign had gone bad with mold. In contrast, beautiful California Giant strawberries in 16-ounce packages with no prices were also intermingled in the display. A produce manager said the consumer could choose either in order to get the sale price. Admirable, but wouldn’t it have been better marketing to simply remove the moldy strawberries and replace the sign?

Are Supermarkets Even Interested?

Are supermarkets aiming to compete with Wal-Mart on price? If so, one would theorize that stores near supercenters would offer lower prices than stores distant from supercenters. To test this proposition, we went to see if the Super Stop & Shop nearby the Wal-Mart Supercenter in North Windham would undercut its sister Super Stop & Shop in the more affluent town of Wilton, CT, which is far from any Wal-Mart Supercenter. A comparative study generally proved this proximity-to-supercenter theory not to be the case.

In most instances, product prices and sales were exactly the same whether in Wal-Mart country or not. Notable differences included bananas. In Wilton, Super Stop & Shop branded bananas were selling for 69 cents per pound. In Willimantic, bananas were 49 cents, or 1 cent per pound more than at Wal-Mart.

With apples, Empires win Wilton were 43 percent more than Wal-Mart, while only 2 percent more in Willimantic. If one shopped in Wilton that day, Sunset branded tomatoes on. The vine was $2.99 per pound with the loyalty card and $3.49 per pound without. In Willimantic, the same product was $2.69 per pound Wilton had T. Marzetti vegetable dip for $3.29 versus the $2.99 in Wal-Mart territory.

The Wilton store was also higher on the three pear varieties studied; lemons; 5-pound bags of Idaho potatoes, green cabbage, and bell peppers. If you wanted nice large artichokes, however, Wilton Stop & Shop out-priced its Willimantic sister that day.


If supermarkets can’t or choose not to compete on price, can they distinguish enough in other areas to keep shoppers from defecting to Wal-Mart?

Supermarkets may be banking on shoppers who prefer to stay in their neighborhood rather than to travel the extra distance to a Wal-Mart. After all, there are some consumers who simply don’t like the large supercenter Forman. And there are some consumers who appreciate the more extensive food variety or other value propositions offered by conventional stores. Perhaps, Wal-Mart’s cut-rate prices may attract a different consumer than those that supermarkets are going after.

Wal-Mart’s Neighborhood Market, a shopping venue in the development stages, is designed to address some of these issues — if supermarkets don’t feel enough heat from the supercenter invasion already. After all, a store doesn’t have to be the cheapest in the business, but if not competitive on price, what are its special point of differentiation and will those be enough? How much price inflation on the total shopping basket is the consumer willing to tolerate before switching loyalties?