Wal-Mart Pricing Report: Round XIV

Walmart Price Comparison

Wal-Mart Takes On Canadian Retailers

Our Toronto results show a similar pattern of disengagement from the problem.

There is a good chance Wal-Mart will be very successful in Canada. The results of the 14th iteration of the Produce Business Wal-Mart Pricing Report are in, and we leave the United States for the first time to visit a Wal-Mart Supercenter and its competitors in Toronto, ON, Canada.

Our findings: 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.

Wal-Mart Supercenter vs 4 Chains
Price Comparison — Toronto, CA

July 2007 – Prices Available To The General Public
STORE NAME WALMART A & P BRUNO’S
Produce Item How
Priced
Regular
Price
Regular
Price
% Over
Wal-Mart
Regular
Price
% Over
Wal-Mart
Apples – Granny Smith Lb $0.97 $1.69 74.23% $1.69 74.23%
Apples – Red Delicious Lb $0.97 $1.69 74.23% $1.69 74.23%
Asparagus Each $2.97 $3.99 34.34% $3.99 34.34%
Bananas – Yellow Lb $0.47 $0.69 46.81% $0.69 46.81%
Beans – Green Lb $1.47 $2.49 69.39% $2.99 103.40%
Blackberries – 5.6 oz Clam Each $2.97 $4.99 68.01% $3.99 34.34%
Bok Choy Lb $2.16 $1.99 -7.87% $1.99 -7.87%
Broccoli Lb $1.17 $1.99 70.09% $1.49 27.35%
Cabbage – Green Each $1.27 $1.99 56.69% $1.49 17.32%
Cantaloupe – Whole Each $2.47 $2.99 21.05% $2.67 8.10%
Carrots – Whole Lb $0.58 $0.89 53.45% $1.29 122.41%
Celery Bunch $1.47 $1.99 35.37% $1.99 35.37%
Cucumbers – English Each $1.07 $1.49 39.25% $1.99 85.98%
Cucumbers – Regular Each $0.57 $0.99 73.68% $0.99 73.68%
Dips – (296-350 ml) Each $2.47 $3.49 41.30% $3.49 41.30%
Dressings – (350-385 ml) Each $3.77 $3.99 5.84% $3.99 5.84%
Eggplant Lb $1.97 $1.99 1.02% $1.88 -4.57%
Garlic Each $0.97 $1.25 28.35% $0.89 -8.25%
Grapefruit – Red Each $0.44 $1.39 215.91% $0.75 69.32%
Grapes – Green Seedless Lb $2.97 $3.99 34.34% $2.99 0.67%
Grapes – Red Seedless Lb $1.47 $2.99 103.40% $1.99 35.37%
Green Onions Bunch $0.47 $0.89 89.36% $0.69 46.81%
Honeydew – Whole Each $2.97 $3.99 34.34% $3.99 34.34%
Kiwi Each $0.33 $0.50 50.76% $0.69 109.09%
Lettuce – Green Leaf Each $0.97 $1.99 105.15% $1.49 53.61%
Lettuce – Iceberg Each $0.97 $1.69 74.23% $1.49 53.61%
Lettuce – Romaine Each $0.97 $1.69 74.23% $1.69 74.23%
Mangos – Red Large Each $0.97 $1.97 103.09% $1.29 32.99%
Mushrooms – White Packaged 8 oz $1.47 $2.49 69.39% $2.29 55.78%
Onions – Red Bulk Lb $1.97 $2.49 26.40% $2.59 31.47%
Onions – Sweet Bulk Lb $1.97 $1.99 1.02% $1.89 -4.06%
Pears – Bosc Lb $0.97 $1.69 74.23% $1.79 84.54%
Peppers – Bell Green Lb $1.77 $2.49 40.68% $2.99 68.93%
Pineapple Each $3.97 $4.99 25.69% $4.99 25.69%
Potatoes – Red Bulk Lb $1.27 $1.29 1.57% $1.49 17.32%
Potatoes – White Bulk Lb $1.27 $1.49 17.32% $1.59 25.20%
Salad – Caesar 10 oz Bag 10 oz $3.97 $3.99 0.50% $3.99 0.50%
Salad – Garden 1# Bag Each $2.97 $2.99 0.67% $1.99 -33.00%
Squash – Zucchini Lb $2.97 $1.99 -33.00% $1.59 -46.46%
Tomatoes – Grape – Pint Each $2.97 $3.99 34.34% $3.99 34.34%
Tomatoes – Hothouse Lb $1.47 $2.49 69.39% $2.99 103.40%
Tomatoes – Roma/Plum Lb $1.27 $1.99 56.69% $2.99 135.43%
Turnips Lb $0.79 $0.99 25.32% $0.97 22.78%
Yams Lb $0.99 $1.29 30.30% $0.98 -1.01%
MARKET BASKET $74.35 $100.30 34.91% $95.36 28.25%

 

STORE NAME WALMART LOBLAWS SOBEYS
Produce Item How
Priced
Regular
Price
Regular
Price
% Over
Wal-Mart
Regular
Price
% Over
Wal-Mart
Apples – Granny Smith Lb $0.97 $1.29 32.99% $1.99 105.15%
Apples – Red Delicious Lb $0.97 $1.29 32.99% $1.69 74.23%
Asparagus Each $2.97 $2.99 0.67% $3.99 34.34%
Bananas – Yellow Lb $0.47 $0.59 25.53% $0.59 25.53%
Beans – Green Lb $1.47 $1.99 35.37% $1.49 1.36%
Blackberries – 5.6 oz Clam Each $2.97 $2.99 0.67% $3.99 34.34%
Bok Choy Lb $2.16 $0.79 -63.43% $1.29 -40.28%
Broccoli Lb $1.17 $1.69 44.44% $1.29 10.26%
Cabbage – Green Each $1.27 $1.99 56.69% $1.79 40.94%
Cantaloupe – Whole Each $2.47 $2.99 21.05% $2.69 8.91%
Carrots – Whole Lb $0.58 $0.69 18.97% $0.99 70.69%
Celery Bunch $1.47 $1.99 35.37% $1.79 21.77%
Cucumbers – English Each $1.07 $1.49 39.25% $1.29 20.56%
Cucumbers – Regular Each $0.57 $0.79 38.60% $0.99 73.68%
Dips – (296-350 ml) Each $2.47 $3.49 41.30% $2.99 21.05%
Dressings – (350-385 ml) Each $3.77 $3.99 5.84% $3.49 -7.43%
Eggplant Lb $1.97 $1.89 -4.06% $2.99 51.78%
Garlic Each $0.97 $0.99 2.06% $1.49 53.61%
Grapefruit – Red Each $0.44 $0.99 125.00% $1.29 193.18%
Grapes – Green Seedless Lb $2.97 $2.99 0.67% $3.99 34.34%
Grapes – Red Seedless Lb $1.47 $1.99 35.37% $2.99 103.40%
Green Onions Bunch $0.47 $0.59 25.53% $0.99 110.64%
Honeydew – Whole Each $2.97 $2.99 0.67% $5.99 101.68%
Kiwi Each $0.33 $0.33 0.00% $0.39 18.18%
Lettuce – Green Leaf Each $0.97 $1.29 32.99% $1.29 32.99%
Lettuce – Iceberg Each $0.97 $2.49 156.70% $1.69 74.23%
Lettuce – Romaine Each $0.97 $1.29 32.99% $1.49 53.61%
Mangos – Red Large Each $0.97 $1.29 32.99% $0.99 2.06%
Mushrooms – White Packaged 8 oz $1.47 $2.29 55.78% $1.49 1.36%
Onions – Red Bulk Lb $1.97 $2.49 26.40% $2.49 26.40%
Onions – Sweet Bulk Lb $1.97 $1.99 1.02% $1.49 -24.37%
Pears – Bosc Lb $0.97 $1.29 32.99% $1.79 84.54%
Peppers – Bell Green Lb $1.77 $2.49 40.68% $2.99 68.93%
Pineapple Each $3.97 $4.99 25.69% $4.99 25.69%
Potatoes – Red Bulk Lb $1.27 $1.49 17.32% $1.29 1.57%
Potatoes – White Bulk Lb $1.27 $1.49 17.32% $1.79 40.94%
Salad – Caesar 10 oz Bag 10 oz $3.97 $2.99 -24.69% $3.79 -4.53%
Salad – Garden 1# Bag Each $2.97 $1.99 -33.00% $1.99 -33.00%
Squash – Zucchini Lb $2.97 $1.49 -49.83% $1.49 -49.83%
Tomatoes – Grape – Pint Each $2.97 $2.99 0.67% $3.99 34.34%
Tomatoes – Hothouse Lb $1.47 $1.99 35.37% $1.49 1.36%
Tomatoes – Roma/Plum Lb $1.27 $1.69 33.07% $1.79 40.94%
Turnips Lb $0.79 $0.69 -12.66% $0.79 0.00%
Yams Lb $0.99 $1.29 30.30% $0.99 0.00%
MARKET BASKET $74.35 $83.80 12.71% $92.56 24.49%

They are allowing Wal-Mart to establish a reputation as the low-price leader on fresh produce. There are exceptions, of course, but in general, the practice in the United States when Wal-Mart came to town could best be described as “Do nothing until forced to” — certainly on price.

Consumers would visit the Wal-Mart Supercenter and note significantly lower prices. Perhaps the consumers wouldn’t shop there regularly — Wal-Mart might have been too far from their home or inconvenient to their office. But with each visit, consumers would notice value.

The dynamic was well established. Wal-Mart would open one or two Supercenters in a town. With only a few stores, Wal-Mart was not yet a major competitive threat.

This is similar to the situation in Canada where, after all, Wal-Mart only has seven Supercenters. If a chain lowered its price points in all its stores to be within shooting distance of Wal-Mart, it would cost the chain a fortune. So in market after market, local retailers did not go after Wal-Mart in pricing and went for the short-term money by continuing to offer their customary line of higher-priced produce.

In the meantime, consumers would visit the Wal-Mart Supercenter and note significantly lower prices. Perhaps the consumers wouldn’t shop there regularly — Wal-Mart might have been too far from their home or inconvenient to their office. But with each visit, consumers would notice value.

In time, Wal-Mart built more Supercenters. And by that time, the consumers had become predisposed to the notion that Wal-Mart offered good value on fresh produce.

At that point there was always a mad dash to get competitive — but it was usually too late. Only the biggest, strongest chains with the capital to reorganize and reformat generally survived.

Loblaws Comes Closest To Wal-Mart Pricing

Our Toronto results show a similar pattern of disengagement from the problem: All the dollar figures, of course, are in Canadian dollars.

Our experience has been that in many cases it is not necessary to beat Wal-Mart on pricing. Obviously, many other things matter, but 5 percent is one thing, 10 percent might be possible,but at 34.9 percent, A&P will not be competitive for the great middle class.

But it is the percentages that are striking. Metro bought A&P’s Canadian division and seems to feel no compunction to be competitive.

With a price level almost 35 percent higher than the Wal-Mart Supercenter, it is simply not in the ballpark. In fact, A&P was the second most expensive supermarket we have ever studied compared to Wal-Mart. Only a Winn-Dixie beat it out — and that chain promptly filed for Chapter 11 protection.

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, UT Harmon’s 2% Smith’s 6% Albertson’s 12%
South Florida Super Target 22% Publix 31% Winn-Dixie 52%
Dallas, TX Albertson’s 23% Brookshires 7% Kroger 19%
Neighborhood Market -1.2% Tom Thumb 27%
Portland, OR Albertson’s 30% Fred Meyer 22% Haggen 27%
Safeway 37%
Phoenix, AZ Albertson’s 22% Bashas’ 25% Fry’s 15%
Safeway 17%
Palm Springs, CA Albertson’s 19% Jensen’s 60% Ralphs 16%
Vons 20%
Detroit, MI A&P Food Basic -17% Farmer Jack 24% Kroger 28%
Meijer 3%
St. Louis, MO Dierbergs 22% Schnucks 14%
Houston, TX HEB 15% Kroger 30% Fiesta Mart -0.3%
Atlanta, GA Harry’s 18% Ingles 16% Kroger 25%
Publix 13% Target 3%
Denver, CO Albertsons 16% King Sooper 21% Safeway 25%
Portland, OR Albertsons 32% Fred Meyer 21% QFC 54%
Safeway 30%
Toronto, Canada A&P 35% Bruno’s 28% Loblaws 13%
Sobeys 45%

Our experience has been that in many cases it is not necessary to beat Wal-Mart on pricing. Obviously, many other things matter, but 5 percent is one thing, 10 percent might be possible, but at 34.9 percent, A&P will not be competitive for the great middle class.

Neither will Bruno’s nor Sobeys, coming in at 28.25 percent and 24.49 percent over Wal-Mart, respectively. It is hard to understand how these chains can just be indifferent to their consumers, who must start to perceive these chains as high priced.

Only Loblaws has a shot — coming in at 12.71 percent over Wal-Mart’s prices, Loblaws is at least approaching a range where superiority in service, convenience, assortment and other factors can compensate for higher prices — although Loblaws should aim to get the differential below 10 percent.

Of course, many retailers successfully co-exist with Wal-Mart. Like Whole Foods, they don’t so much compete with Wal-Mart as get out of its way.

But the numbers don’t lie. If Canadian supermarkets don’t respond more aggressively to remain competitive with Wal-Mart, there will soon be not seven Supercenters but 300.

Forewarned is forearmed.

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