Wal-Mart Pricing Report: Round III

Walmart Price Comparison

Wal-Mart Prices Look Sunny In South Florida

Publix, Winn-Dixie, and SuperTarget are outpriced by Wal-Mart.

This series of price comparisons was kicked off with a visit to Connecticut, where the northeast rollout of a Wal-Mart Supercenter crushed supermarket competitors with beards to prices — ranging from 23 percent at Super Stop & Shop to 36 percent at Big Y over Was-Mart on fresh produce.

When we moved to the Salt Lake City area in Round II of our series, we found that local retailers were far more competitive. Wal-Mart still won, but Harmon’s was only 2 percent over 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.

Wal-Mart Supercenter vs 3 Chains
Price Comparison — South Florida

February 2003 – Prices Available To The General Public
STORE NAME WALMART PUBLIX SUPER TARGET WINN-DIXIE
Produce Item How
Priced
Regular
Price
Regular
Price
% Over
Wal-Mart
Regular
Price
% Over
Wal-Mart
Regular
Price
% Over
Wal-Mart
Apples – Granny Smith – Small Lb $0.97 $1.39 43.30% $0.89 -8.25% $1.09 12.37%
Apples – Red Delicious – Large Lb $0.97 $1.39 43.30% $1.09 12.37% $0.89 -8.25%
Artichokes Each $1.50 $1.50 0.00% $1.99 32.67% $2.59 72.67%
Asparagus Lb $2.93 $3.49 19.11% $2.99 2.05% $3.79 29.35%
Avocados – Medium Each $1.50 $1.50 0.00% $1.49 -0.67% $1.50 0.00%
Bananas – Yellow Lb $0.44 $0.33 -25.00% $0.49 11.36% $0.49 11.36%
Beans – Green Lb $1.32 $0.99 -25.00% $1.49 12.88% $1.59 20.45%
Blueberries 4-5 oz $1.97 $4.49 127.92% $3.99 102.54% $4.99 153.30%
Cabbage – Green Lb $0.47 $0.49 4.26% $0.39 -17.02% $0.59 25.53%
Cabbage – Red Lb $0.68 $0.59 -13.24% $0.59 -13.24% $0.99 45.59%
Cantaloupe – Whole Each $1.88 $2.50 32.98% $2.50 32.98% $2.50 32.98%
Carrots – 1# Pkg Each $0.47 $0.79 68.09% $0.59 25.53% $1.29 174.47%
Cauliflower Each $1.77 $1.49 -15.82% $1.99 12.43% $2.69 51.98%
Celery Each $0.94 $1.39 47.87% $0.99 5.32% $1.19 26.60%
Coleslaw – 1# Bag Each $1.38 $1.49 7.97% $1.39 0.72% $1.99 44.20%
Cucumbers – Regular Each $0.45 $0.50 11.11% $0.20 -55.56% $0.79 75.56%
Dressing – Other 12-16 oz $2.68 $2.89 7.84% $2.79 4.10% $2.69 0.37%
Garlic Lb $1.68 $1.99 18.45% $1.99 18.45% $2.79 66.07%
Green Onions Bunch $0.50 $0.50 0.00% $0.50 0.00% $0.69 38.00%
Honeydew – Whole Each $2.63 $2.99 13.69% $2.99 13.69% $3.99 51.71%
Kiwi Each $0.25 $0.30 19.20% $0.33 32.00% $0.40 58.67%
Lettuce – Green Leaf Each $0.94 $0.99 5.32% $0.99 5.32% $1.50 59.57%
Lettuce – Red Leaf Each $1.34 $0.99 -26.12% $0.99 -26.12% $1.69 26.12%
Lettuce – Romaine Bulk Each $0.94 $1.19 26.60% $1.19 26.60 $1.69 79.79%
Limes – Bulk Each $0.08 $0.13 50.00% $0.20 140.00% $0.13 50.00%
Mangoes Each $0.98 $1.00 2.04% $0.99 1.02% $1.99 103.96%
Onions – Red Lb $0.98 $0.79 -19.39% $0.99 1.02% $1.49 52.04%
Onions – Yellow Lb $0.68 $0.49 -27.94% $0.59 -13.24% $0.79 16.18%
Onions – Yellow Bag 3# Bag $1.84 $1.29 -29.89% $1.99 8.15% $1.79 -2.72%
Papayas Lb $1.28 $1.99 55.47% $1.29 0.78% $1.49 16.41%
Pears – Bartlett Lb $0.97 $0.79 -18.56% $0.99 2.06% $1.39 43.30%
Peas – Snow Lb $1.47 $3.59 144.22% $3.49 137.41% $3.09 110.20%
Peppers – Green Bell Each $0.45 $0.45 -0.83% $0.59 31.11% $1.29 186.87%
Peppers – Red Lb $2.67 $3.69 38.20% $2.99 11.99% $3.54 32.67%
Pineapple Each $3.97 $5.99 50.88% $4.49 13.10% $3.99 0.50%
Potatoes – Red Bulk Lb $0.48 $0.79 64.58% $0.79 64.58% $0.99 106.25%
Raspberries 5-6 oz $2.97 $3.99 34.34% $3.49 17.51% $4.29 44.44%
Salad – Fresh Express Caesar 10 oz $2.53 $2.99 18.18% $2.79 10.28% $2.79 10.28%
Strawberries 1# Pkg $2.48 $6.99 181.85% $4.99 101.21% $6.99 181.85%
Tomatoes – Cherry 10-13 oz $2.84 $1.99 -29.93% $2.49 -12.32% $2.59 -8.80%
Tomatoes – Grape Pint $1.50 $2.49 66.00% $2.69 79.33% $3.99 166.00%
Tomatoes – On the Vine (PLU 4664) Lb $1.93 $2.99 54.92% $2.99 54.92% $4.29 122.28%
Tomatoes – Plum/Roma Lb $1.23 $2.29 86.18% $1.69 37.40% $2.59 110.57%
MARKET BASKET $61.93 $80.87 30.57% $75.35 21.66% $93.89 51.60%

It would be damning enough if we simply had found that Publix is content to price its produce at 31 percent over Wal-Mart, striking enough if we had only found that Winn-Dixie was content to price its department at 52 percent over Wal-Mart. This time, however we added a different competitor into the mix: A Super Target store. This concept adds a supermarket  onto a conventional Target discount store, much as the Way-Mart Supercenter marries a supermarket to a Wal-Mart general merchandise store.

Going into the study, we anticipated that the ability of Wal-Mart’s Supercenters to outpace competitors in market after market making a statement about the Supercenter format. Perhaps the format is particularly efficient and allows operators to sell at good prices and still make a profit. Or, perhaps, as some have theorized, the real purpose of food in general and produce in particular is to increase the frequency of customer visits to the general merchandise store, and thus operators of supercenters can afford to work on tight margins will be made selling general merchandise to the same customer.

South Florida Advertised Specials

Wal-Mart vs. Publix
STORE NAME WALMART PUBLIX
Produce Item Regular
Price
Regular
Price
% Over
Wal-Mart
Artichokes $1.50 $1.50 0.00%
Bananas – Yellow $0.44 $0.33 -25.00%
Cabbage – Green $0.47 $0.49 4.26%
Onions – Yellow $0.68 $0.49 -27.94%
Potatoes – Red Bulk $0.48 $0.79 64.58%
MARKET BASKET $3.57 $3.60 0.84%

 

Wal-Mart vs. Winn-Dixie
STORE NAME WALMART WINN-DIXIE
Produce Item Regular
Price
Regular
Price
% Over
Wal-Mart
Cabbage – Green $0.47 $0.59 25.53%
Kiwi $0.25 $0.40 60.00%
Onions – Yellow $0.68 $0.79 16.18%
Papayas $1.28 $1.49 16.41%
Pears – Bartlett $0.97 $1.39 43.30%
Pineapple $3.97 $3.99 0.50%
Tomatoes – Grape $1.50 $3.99 166.00%
Tomatoes – On the Vine $1.93 $4.29 122.28%
MARKET BASKET $11.05 $16.93 53.21%

 

Wal-Mart vs. Super Target
STORE NAME WALMART SUPER TARGET
Produce Item Regular
Price
Regular
Price
% Over
Wal-Mart
Apples – Granny Smith – Small $0.97 $0.89 -8.25%
Bananas – Yellow $0.44 $0.49 11.36%
Cucumbers – Regular $0.45 $0.20 -55.56%
Limes – Bulk $0.08 $0.20 150.00%
Onions – Red $0.98 $0.99 1.02%
MARKET BASKET $2.92 $2.77 -5.14%

But even the Target supercenter, though beating out both Public and Winn-Dixie, was really not competitive with Wal-Mart, pricing out at 22 percent over the Wal-Mart produce basket. This 22 percent gap on identical formats raises the possibility that the competitive positioning is not a matter of format, but a matter of company capability and philosophy. Put another way, it is not that supercenters are going to beat everyone; it is that Wal-Mart will.

This may account for the mystery as to why others, including major supermarket chains, haven’t fished to roll out their own supercenters

On Ad

Theoretically, it doesn’t matter what competitors might do on an ad. Wal-Mart has a policy that it will not be undersold, and any customer who brings in a competitor’s ad will be able to purchase the item at the same price at Wal-Mart. But most people don’t bother, and the policy is not well publicized, particularly in the food area.

Indeed in fresh produce, such a policy could cause real problems — when an item goes on an ad, sales typically spike. If a lot of people exercised this Wal-Mart option, there is a real question as to whether the store could be adequately stocked.

So for the sake of our study, we pay attention to items actually promoted as being on special. From the beginning, we have theorized that although supermarkets might lose out to Wal-Mart overall when it comes to pricing, they might decide to cream Wal-Mart on advertised specials. This might just create enough consumer confusion that it would muddy the Wal-Mart image as the low-price leader.

But in Southeastern Florida, at least, the effort is a tough one for Wal-Mart’s supermarket competitors. Winn-Dixie seems to have decided to simply ignore Wal-Mart. Winn-Dixie’s advertised specials were priced 53.21 percent over Wal-Mart’s prices for the identical items. In fact, Winn-Dixie’s specials were so uncompetitive that the comparison against Wal-Mart was slightly worse than the average for the whole department.

Publix drew to a virtual draw with Wal-Mart on its advertised specials, coming in just 0.84 percent over Wal-Mart’s prices. In addition, Publix pulled off a coup, being the first supermarket chain in our study to beat Wal-Mart on the price of bananas — Wal-Mart sold Chiquita at 44 cents a pound, and Publix clobbered them with Chiquita bananas on special at 33 cents a pound. In fact, because our study weighs equally a pound of bananas and a pound of artichokes, in real life market baskets, where consumers are apt to purchase bananas more heavily, public almost certainly beat Wal-Mart this week on advertised specials.

How They Stack Up Against Wal-Mart Supercenter

Region Store % Over
Wal-Mart
Store % Over
Wal-Mart
Store % Over
Wal-Mart
Connecticut Super Stop & Shop 23% Shaws 34% Big Y 36%
Salt Lake City Harmon’s 2% Smith’s 6% Albertson’s 12%
South Florida Super Target 22% Publix 31% Winn-Dixie 52%

Super Target edges out Wal-Mart with price level 5.14 percent below Wal-Mart’s on Target’s advertised specials. Though Target beat Wal-Mart, it was not that impressive a win, when one considers that back in Salt Lake City on advertised special’s Harmon’s beat Wal-Mart by 43.07 percent and Smith’s beat Wal-Mart by 22.39 percent.

Also, the ad specials look less winning for Target when one considers that it won because it creamed Wal-Mart on cucumbers and small Granny Smith apples but lost on bananas, limes, and red onions. The typical market basket would show Wal-Mart a winner.

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