Wal-Mart Cuts Prices on Groceries
Wal-Mart is cutting prices in several markets as the chain prepares for German-based discount grocery chain Aldi’s expansion into the U.S., according to reports. Stores have lowered prices in key markets across 11 states, including Kansas, Iowa, Illinois, Indiana, North Carolina, South Carolina and Florida. The markets account for 56 percent of the company's revenue. The prices were slashed after running a price-comparison test in 1,200 U.S. stores that was aimed at finding the right price point across a range of products that will attract more shoppers, and then adjusting prices as needed. Wal-Mart is reportedly working with consumer packaged goods vendors, demanding price concessions and hoping they can help the company beat rival prices “80 percent of the time.”
Total Retail’s Take: Wal-Mart has good reason to proactively lower prices as competition is heating up in the grocery aisles. At one point earlier this year, for example, retail analysts found that Aldi’s prices were about 20 percent lower than Wal-Mart’s. (After the tests and the subsequent price cutting, Wal-Mart’s merchandise was on average 8 percent less expensive than Aldi. ) And, besides the Aldi expansion into the U.S., European retailer Lidl will soon open its first stores in the U.S. What’s more, Kroger has been taking market share at both the high- and low-end of the market.
