Wal-Mart Pricing Report: Round XXVI

Walmart Price Comparison

Wal-Mart ‘Makes Hay’ In The Heartland

As Dahl’s, Hy-Vee and Target sell produce at prices more than 24 percent higher than Wal-Mart,
niche retailer Trader Joe’s competes at only 4 percent over the behemoth from Bentonville.

For Wal-Mart, the Des Moines, IA, market is a return to the good old days — with just a hint of problems to come.

The Produce Business Wal-Mart Pricing Report has now been underway for more than a decade and includes 26 separate market studies. In the early years, as Wal-Mart rolled its supercenter concept out across America, most supermarkets were uncertain how to respond. Executives felt they couldn’t reduce prices, as their cost structure wouldn’t support such discounting. Some, such as Safeway, moved upscale, converting store after store in line with its Lifestyle concept. Other retailers simply froze, held their price points, and prayed for the best.

Wal-Mart beat all comers on price with supermarkets regularly showing up with price points 20 percent higher than Wal-Mart on fresh produce.

That differential changed as retailers that survived the onslaught of Wal-Mart have learned more effectively how to compete on price with the behemoth of Bentonville. In fact, since 2010, Wal-Mart has not won a single Produce Business Wal-Mart Pricing Study. It has been beaten by big chains, such as Kroger in Savannah, GA, and growing specialty chains, such as Sprouts in both Dallas, TX and Tulsa, OK. Growing ethnic chains also pose an emergent problem for Wal-Mart as in Lake Worth, FL, where both El Bodegon and Presidente Supermarkets (two chains with a Latino focus) beat the store.

Wal-Mart Supercenter vs 3 Chains
Price Comparison — Des Moines, Iowa

Prices Available To The General Public
STORE NAME WALMART DAHL’S HY-VEE TARGET SUPERCENTER
Produce Item How Priced Regular
Price*
Regular
Price*
% Over
Wal-Mart
Regular
Price*
% Over
Wal-Mart
Regular
Price*
% Over
Wal-Mart
Apples – Granny Smith Lb 1.27 2.49 96.06% 1.99 56.69% 1.39 9.45%
Apples – Other Variety 5 Lb 4.47 12.45 178.52% 19.95 346.31% 19.80 342.95%
Apples – Red Delicious Lb 1.27 1.79 40.94% 0.99 -22.05% 1.69 33.07%
Avocados Each 0.98 1.29 31.63% 1.88 91.84% 1.49 52.04%
Bananas – Yellow Lb 0.57 0.59 3.51% 0.59 3.51% 0.57 0.00%
Blueberries 6 oz Pkg 2.50 1.50 -40.00% 3.06 22.40% 3.49 39.60%
Cantaloupe – Whole Each 1.50 2.49 66.00% 2.50 66.67% 1.99 32.67%
Grapefruit – Red Each 0.78 0.50 -35.90% 0.69 -11.54% 0.42 -46.15%
Grapes – Green Seedless Lb 3.29 3.99 21.28% 3.48 5.78% 2.99 -9.12%
Grapes – Red Seedless Lb 2.78 2.99 7.55% 3.48 25.18% 2.49 -10.43%
Honeydew – Whole Each 2.98 3.99 33.89% 3.99 33.89% 2.99 0.34%
Kiwi Each 0.46 0.50 8.70% 0.66 43.48% 0.49 6.52%
Lemons – Bulk Each 0.64 0.99 54.69% 0.66 3.13% 0.59 -7.81%
Mangos Each 0.88 0.69 -21.59% 1.00 13.64% 1.29 46.59%
Nectarines Lb 2.48 3.99 60.89% 3.99 60.89% 2.29 -7.66%
Oranges – Navel Each 0.68 0.84 23.53% 0.84 23.53% 0.79 16.18%
Peaches – California Lb 2.98 3.99 33.89% 1.99 -33.22% 2.49 -16.44%
Pears – Anjou Lb 1.77 1.79 1.13% 1.88 6.21% 1.89 6.78%
Strawberries – 1# Pkg Package 1.78 1.50 -15.73% 3.99 124.16% 2.00 12.36%
Watermelon – Seedless Each 5.98 3.99 -33.28% 6.99 16.89% 5.99 0.17%
Asparagus Lb 2.88 3.99 38.54% 3.99 38.54% 3.49 21.18%
Beans – Green 12 oz 2.98 1.49 -50.00% 2.24 -24.83% 1.99 -33.22%
Brussel Sprouts Lb 2.48 3.99 60.89% 3.99 60.89% 5.32 114.52%
Carrots – Baby Lb Pkg 1.66 1.79 7.83% 1.99 19.88% 2.65 59.64%
Cauliflower Each 2.98 3.99 33.89% 2.99 0.34% 3.14 5.37%
Celery Each 1.98 1.29 -34.85% 1.38 -30.30% 1.89 -4.55%
Corn – Yellow Each 0.20 0.33 65.00% 0.66 230.00% 0.20 0.00%
Eggplant Each 1.68 1.99 18.45% 1.50 -10.71% 1.99 18.45%
Garlic 3 oz 1.98 0.75 -62.12% 0.56 -71.72% 0.59 -70.20%
Lettuce – Iceberg Bulk Each 1.18 1.29 9.32% 1.48 25.42% 1.52 28.81%
Lettuce – Romaine Bulk Bag 3.38 2.99 -11.54% 1.99 -41.12% 1.29 -61.83%
Mushrooms – White Package 8 oz. Pkg 1.28 2.00 56.25% 1.75 36.72% 2.24 75.00%
Onions – Red Lb 0.88 1.69 92.05% 1.48 68.18% 1.09 23.86%
Peas – Snap Lb 2.74 3.99 45.62% 7.98 191.24% 5.98 118.25%
Peas – Snow Lb 2.74 3.99 45.62% 10.64 288.32% 7.97 190.88%
Peppers – Green Bell Each 0.78 0.99 26.92% 0.77 -1.28% 1.02 30.77%
Peppers – Red Each 1.48 2.00 35.14% 1.28 -13.51% 1.79 20.95%
Potatoes – Russet Bulk Lb 0.98 0.99 1.02% 1.00 2.04% 0.99 1.02%
Radishes Bunch 0.88 1.49 69.32% 0.88 0.00% 0.99 12.50%
Spinach – Bulk Each 2.98 1.99 -33.22% 1.99 -33.22% 1.39 -53.36%
Squash – Zucchini Lb 1.58 1.49 -5.70% 1.48 -6.33% 2.99 89.24%
Sweet Potatoes Lb 0.98 1.99 103.06% 1.29 31.63% 0.99 1.02%
Tomatoes – Grape 10 Oz 2.48 2.49 0.40% 2.50 0.81% 2.50 0.81%
Tomatoes – Plum/Roma Lb 0.78 1.99 155.13% 1.28 64.10% 1.19 52.56%
Coleslaw – 1# Bag 1 Lb Bag 1.75 1.13 -35.43% 1.88 7.43% 1.69 -3.43%
Fresh-cut Fruit 48 Oz 12.98 17.97 38.44% 14.97 15.33% 5.97 -54.01%
Fresh-cut Veggies 20 Oz 5.98 8.79 46.99% 6.24 4.35% 8.56 43.14%
Salad – Caesar 14.5 Oz 3.38 3.69 9.17% 7.04 108.28% 6.66 97.04%
MARKET BASKET 108.07 134.91 24.84% 151.82 40.48% 135.21 25.11%
Red is adjusted price

In Des Moines, however, as the song goes, “Happy Days are Here Again” for Wal-Mart. Local favorite Dahl’s Foods — “Iowa’s Premier Grocery Store since 1951” — accrued lots of firsts to its name. It is believed Dahl’s had the first supermarket bakery between the Mississippi and The Rockies. Long before online orders and pick up back in 1963, there was a small brick building in the corner of the parking lot, known as the “Dahl House,” which was connected to the store by an underground tunnel and pre-ordered groceries were available for pick up. The world’s first grocery purchase using a debit card is believed to have been made at Dahl’s in 1981.

How They Stack Up Against Wal-Mart Supercenter

Region Store % Over
Wal-Mart
Store % Over
Wal-Mart
Store % Over
Wal-Mart
Connecticut-5/02 Super Stop & Shop 23% Shaws 34% Big Y 36%
Salt Lake City-10/02 Harmon’s 2% Smith’s 6% Albertson’s 12%
South Florida-2/03 Super Target 22% Publix 31% Winn-Dixie 52%
Dallas, Texas-10/03 Albertsons 23% Brookshires 7% Kroger 19%
Neighborhood Market —1.2% Tom Thumb 27%
Portland, OR-3/04 Albertsons 30% Fred Meyer 22% Haggen 27%
Safeway 37%
Phoenix, AZ-8/04 Albertsons 22% Bashas’ 25% Fry’s 15%
Safeway 17%
Palm Springs-10/04 Albertsons 19% Jensen’s 60% Ralphs 16%
Vons 20%
Detroit, MI-1/05 A&P Food Basic —17% Farmer Jack 24% Kroger 28%
Meijer 3%
St. Louis, MO-5/05 Dierbergs 22% Schnucks 14%
Houston, TX-9/05 HEB 15% Kroger 30% Fiesta Mart —0.3%
Atlanta, GA-11/05 Harry’s 18% Ingles 16% Kroger 25%
Publix 13% Target 3%
Denver, CO-5/06 Albertsons 16% King Sooper 21% Safeway 25%
Portland, OR-10/06 Albertsons 32% Fred Meyer 21% QFC 54%
Safeway 30%
Toronto Canada-7/07 A&P 35% Brunos 28% Loblaws 13%
Sobeys 45%
Kansas City, KS-10/07 Dillions 20% Hen House 15% Hy Vee 18%
Price Chopper 13%
Los Angeles-4/08 Fresh & Easy 15% Stater Bros 8% Ralphs 25%
Vons 14%
Orlando, FL-10/08 Publix 32% Super Target 22% Whole Foods 38%
Winn Dixie 28%
Phoenix, AZ 4/09 Wal-Mart Marketside 23% Wal-Mart Neighborhood 7% Bahas 30%
Fresh & Easy 32% Fry’s 27% Safeway 37%
Raleigh, NC 9/09 Food Lion 24% Fresh Market 31% Harris Teeter 35%
Kroger 21% Super Target 11%
Philadelphia 4/10 Acme 17% Genuardi’s 22% Giant 26%
Super Fresh 21% Wegmans 5%
New Jersey 10/10 FoodBasics —1% Pathmark 15% ShopRite 8%
Dallas 10/11 Albertson’s 25% Central Market 19% Kroger 21%
Sprouts —7% Super Target 10% Tom Thumb 51%
Savannah 6/12 Food Lion 7% Fresh Market 51% Kroger — 2%
Piggly Wiggly 27% Publix 22%
Lake Worth, FL 11/12 El Bodegon -9.5% Presidente -18.4% Publix 29%
Sedano’s 6.47% Winn-Dixie 17.4%
Tulsa, OK 10/13 Resor’s 43.6% Sprouts —1.9% Target Supercenter 12.9%
Warehouse Market 8.8% Winn-Dixie 17.4%
Des Moines, IA 6/14 Dahl’s 24.84% Hy-Vee 40.48% Target Supercenter 25.11%
Trader Joe’s 3.98%

Lately, though, Dahl’s is retrenching by closing units in Ankeny and Ames, IA, leaving the chain with 11 stores. One reason may be the difficulty addressing Wal-Mart’s pricing challenge, for in The Produce Business Wal-Mart Pricing Study, Dahl’s market basket of produce came in a full 24.84 percent more than Wal-Mart.

In The Produce Business Wal-Mart Pricing Study, Dahl’s market basket of produce came in a full 24.84 percent more than Wal-Mart.

Yet Dahl’s is an absolute bargain compared with the locally headquartered, but much larger, Hy-Vee, “Where there’s a helpful smile in every aisle.” Hy-Vee is expanding, pushing into the Minneapolis/St. Paul area, having just disclosed plans for a 90,000 square-foot store in Lakeville, MN — its third store in that market. Hy-Vee is the market leader in Iowa. And in our market basket study, it is able to price its produce a whopping 40.48 percent more than Wal-Mart. One wonders if it will be able to sustain such pricing in markets where it is less dominant than Iowa. Target Supercenters have struggled, as Target has never quite figured out how to translate to the food sector its “Tar-zhay” high design concept at a discount. And in this market basket, its price offer, though a discount to Hy-Vee and on par with Dahl’s, still makes Wal-Mart look like quite a bargain. Target’s price point on the produce market basket was 25.11 percent higher than Wal-Mart.

Wal-Mart Supercenter vs Trader Joe’s
Price Comparison — Des Moines, Iowa

Prices Available To The General Public
STORE NAME: Walmart Wal-Mart Price Trader Joe’s
Produce Item How Priced Regular Price Price % Over Walmart
Apples – Granny Smith (PLU #4139) Lb 1.27 1.50 18.11%
Apples – Sliced 14 Oz 2.98 3.49 17.11%
Avocados Each 0.98 1.49 52.04%
Blueberries 6 Oz Pkg 2.50 2.99 19.60%
Cantaloupe – Whole Each 1.50 2.99 99.33%
Grapefruit – Red Each 0.78 0.40 -48.72%
Kiwi Each 0.46 0.49 6.52%
Lemons – Bulk Each 0.64 0.49 -23.44%
Mangos Each 0.88 1.69 92.05%
Nectarines Lb 2.48 2.07 -16.53%
Oranges – Navel Bag 8 LB Bag 6.98 8.98 28.65%
Peaches – California Lb 2.98 2.07 -30.54%
Pears – Anjou Lb 1.77 1.97 11.30%
Pineapple Each 2.98 2.99 0.34%
Watermelon – Cut Each 2.98 3.49 17.11%
Watermelon – Seedless Each 5.98 3.99 -33.28%
Artichokes Each 1.78 0.75 -57.87%
Asparagus Lb 2.88 3.99 38.54%
Beans – Green 12 oz 2.98 2.02 -32.21%
Broccoli – Whole Each 1.98 1.99 0.51%
Brussel Sprouts Lb 2.48 2.49 0.40%
Carrots – Baby Lb Package 1.66 1.19 -28.31%
Carrots – Organic Lb 1.66 0.89 -46.39%
Cauliflower Each 2.98 2.29 -23.15%
Celery Each 1.98 1.79 -9.60%
Corn – Yellow Each 0.20 0.49 145.00%
Cucumbers – English Each 1.98 2.49 25.76%
Eggplant Each 1.68 1.79 6.55%
Garlic 3 oz 1.98 1.49 -24.75%
Lettuce – Iceberg Bulk Each 1.18 1.29 9.32%
Lettuce – Romaine Bulk Bag 3.38 2.49 -26.33%
Mushrooms – White Package 8 oz. Pkg 1.28 1.43 11.72%
Onions – Red Lb 0.88 1.45 64.77%
Onions – Sweet 4 Lb 2.88 3.56 23.61%
Onions – Yellow Bag 3 lb Bag 2.48 3.44 38.71%
Peas – Snap Lb 2.74 3.05 11.31%
Peas – Snow Lb 2.74 4.07 48.54%
Peppers – Green Bell Each 0.78 0.99 26.92%
Peppers – Red Each 1.48 0.99 -33.11%
Potatoes – Russet Bulk Lb 0.98 0.99 1.02%
Sweet Potatoes Lb 0.98 0.99 1.02%
Tomatoes – Cherry Pint 2.50 3.98 59.20%
Tomatoes – Grape 10 Oz 2.48 1.56 -37.10%
Tomatoes – On the Vine (PLU 4664) Lb 1.29 1.83 41.86%
Tomatoes – Plum/Roma Lb 0.78 3.79 385.90%
Coleslaw – 1# Bag 1 Lb Bag 1.75 2.65 51.43%
Fresh-cut Fruit 48 Oz 12.98 11.97 -7.78%
Fresh-cut Veggies 20 Oz 5.98 4.27 -28.60%
Salad – Spring 5 Oz Bag 2.98 1.99 -33.22%
MARKET BASKET 116.88 121.53 3.98%
Red is adjusted price

And Then There Is Trader Joe’s

There are doubtless many reasons why the market sustained these pricing levels, but our experience is that once the spread between Wal-Mart and other grocers gets beyond 10 percent, it means Wal-Mart has room to grow.

Today, however, it probably means that other discount retailers, such as ALDI, would find the market rich pickings. In fact, we did a little side study, which implies that the price point of the market is likely to tumble. We did a produce market basket of Trader Joe’s in Des Moines as well.

We didn’t include it in our main price comparison, because the items carried were too distinct from what other supermarkets sell, so when we tried to find items common to all five of the stores we studied — Wal-Mart, Dahl’s, Hy-Vee, Target Supercenter and Trader Joe’s — the market basket became too small. But in a one-on-one competition between Wal-Mart and Trader Joe’s, we were able to compare more than 50 items, and Trader Joe’s is much more competitive with Wal-Mart on these items than any of the other stores. It came in with a price point just 3.98 percent above Wal-Mart. In our experience, that is a price differential that can easily be justified to consumers by touting advantages such as location convenience, shopping experience, product quality, exclusive offerings, pleasant environment, easy parking, etc.

In a one-on-one competition between Wal-Mart and Trader Joe’s, we were able to compare more than 50 items, and Trader Joe’s is much more competitive with Wal-Mart on these items than any of the other stores.

This seems to be the future. Although some substantial chains, notably Kroger, manage to compete with Wal-Mart on price, it is traditional supermarkets that give up market share to not only Wal-Mart but also ALDI, Trader Joe’s, Sprouts, Latino and Asian retailers, Internet shopping services, Dollar Stores that add fresh to their lineup, as well as others. It is common to value retailers by multiples of EBITDA (earnings before interest, taxes and depreciation amortization) or other such metrics, but these historical measures may be deceiving in markets in flux. Perhaps retailers who keep earnings high are just creating an umbrella that will attract new competitors. Maybe these retailers would be better off pricing in such a way that profit opportunities in the market are not perceived as lucrative, thus making potential competitors less interested. It may make the profit position less right now, but it may also make markets here more sustainable.

How Wal-Mart and traditional grocers respond to the mushrooming of competitive concepts will become more evident through future editions of the Produce Business Wal-Mart Pricing Report.

 

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