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While Dollar General is maintaining its overall opening price-point leadership position among its core retail competitors, its lead is by no means commanding, according to Kantar Retail’s fourth annual opening price point (OPP) study.
For the third consecutive year, Dollar General's overall basket was the least expensive, edging out Walmart Supercenter’s basket by 2.5 percent amid a widening gap between the two national retailers since Kantar's 2013 study.
A noteworthy change from previous years' studies is revealed with the non-edible basket, which Kantar attributed to driving Dollar General’s overall basket lead over Walmart, whose edible grocery and HBA sub-baskets were less expensive than Dollar General's this year. “This year’s results indicate that Dollar General is leveraging non-edible categories to implement its OPP value message at the basket level, which is consistent with the retailer’s stated initiatives,” said Mike Paglia, Kantar Retail's director of retail insights and contributor to the study.
In this year’s study, Kantar Retail selected 21 categories across the edible grocery, non-edible grocery, and HBA segments. All data was collected in southeastern Massachusetts in September 2014. For each retailer, Kantar Retail assessed the lowest price point available to the shopper in that category regardless of brand or pack size (excluding trial sizes) so that the budget-strapped shopper could minimally meet her purchase requirements across categories.
Although Dollar General’s overall basket was the cheapest, OPP leadership differed for each sub-basket: Aldi was the cheapest in edible; Dollar General took the lead in non-edible; and Walmart posted the cheapest HBA sub-basket. Conversely, Target’s total OPP basket was the most expensive of the competitors assessed.
Study results further indicate that promotional pricing had a substantial impact on Dollar General’s OPP price leadership. Walmart’s position was aided by its low-OPP, “88cent” initiative while Aldi’s “food first” strategy was demonstrated by its considerable OPP leadership in the edible sub-basket.
“Family Dollar struggles to provide shoppers with the means to stay on budget,” noted Paglia. “Arguably, its newly announced ad matching campaign is likely intended to help shoppers in this respect while remaining competitive with other retailers," he said, adding that Stop & Shop varied considerably in its pricing and thus its relative competitiveness and despite efforts to be value-oriented, the retailer seems to be able to meet the needs of the low-income shopper on particular SKUs.
“Taken together, the low-income shopper has an array of credible options when it comes to selecting outlets" that meet specific basket requirements, explained Paglia. Given the variability among retailers in leading each of the three sub-baskets, shoppers appear best served by cherry-picking multiple retailers rather than leveraging a one-stop shop. Such a routine favors the shopper who is willing to compare prices on a regular basis and swap destinations for a particular item as necessary. “Retailers who are able to provide both actual and perceived price leadership, in part through opening price points, will win wallet share with this large shopper segment,” Paglia summed.
To learn more about the pricing study, visit Kantar Retail.