Walmart Narrowly Maintains Price Edge Over Target: Kantar

While Walmart maintained its lower-priced edge over Target, the world's largest retailer’s comparative basket tally was just 1 percent less expensive than its Minneapolis-based mass merchant rival, according to the most recent iteration of Kantar Retail’s semi-annual pricing study.

Though the results from the June study confirm that Walmart continues to exhibit nuance in its EDLP value proposition, with a leap even further ahead in non-edible grocery, the comparative prices between the two retail competitors represents the smallest price gap since the June 2012 study.

“Walmart’s slightly weakened stronghold on price leadership shows the difficulty in creating basket separation based on price,” said Laura Kennedy, principal analyst and primary contributor for the Kantar study. "These results emphasize the need for both retailers to pursue alternative methods to drive impression and value perception by their shoppers. The smaller price gap seems to reflect Walmart’s general shift toward a more nuanced and customized approach to EDLP," she added.

The 12th iteration of the semi-annual mass channel pricing study determines which retailer’s basket of grocery and consumable items offers shoppers the lowest price. The study reviews national brands and a sub-set of private label items. This study examines how these retailers’ initiatives are evolving as Walmart moves toward a more nuanced EDLP strategy, and Target attempts to reorient its pricing and value promises to shoppers.

Kantar Retail revisited the same co-located Walmart and Target stores in the Northeastern United States in June 2014 to re-assess a previously established basket of national brand items including edible grocery, non-edible grocery, and health & beauty aid (HBA) items. Only identical SKUs from both retailers were assessed.

More Personalized Pricing

“One notable theme in this study was the incursion of more personalized pricing options at both retailers,” Kennedy states, “that is, the idea that shoppers are ultimately not paying shelf price.” Kennedy adds, “It also affects shoppers’ perceptions of the effort it will take for them to achieve value.”

Other highlights of this study include:

  • Walmart’s overall branded basket was just 1.2 percent less expensive than Target, which narrowed the gap from the January 2014 study. The difference between the two baskets, however, narrowed only slightly versus the June 2013 iteration.
  • Walmart maintained its lead in both grocery sub-baskets, widening the gap in the non-edible basket. Target’s edible basket was 10.5 percent more expensive than Walmart’s, even with two Temporary Price Cuts and an equal number of Rollbacks at Walmart.
  • Target’s use of TPCs declined again.
  • Walmart’s basket featured twice as many Rollbacks as in the last iteration.
  • Gaps between prices for individual items at the two retailers narrowed.
  • Perhaps most notable in this iteration was the necessity to eliminate five items from the total baskets of each retailer to maintain comparability. This was likely a result of Target’s efforts to rationalize national brand SKUs across its box.

Overall Branded Basket Results: Supplier Implications

Walmart’s movement toward more nuanced pricing has important implications for its suppliers. The retailer’s continued emphasis on savings events and even deeper and more frequent Rollbacks presents opportunities for its vendor partners. Walmart is expected to continue using these events as well as KVIs to drive home its overall commitment to low prices and to drum up excitement around that promise inside the store. It’s important for Walmart suppliers to assert their items’ price and value position.

"Shoppers will increasingly have more tools at their fingertips to obtain or create personalized value," Kennedy notes. "This means that suppliers will have to work harder to establish the value of their products at whatever price, as well as solidify and justify their place on Walmart’s own merchandise ladders."

Emphasize the 'Endless Aisle'

Walmart suppliers should also prepare for more scrutiny of competitive pricing as Walmart rolls out Savings Catcher, the digital price-matching tool, nationwide, and should seize opportunities to provide insights that help create personalized experiences for the Walmart shopper.

Target’s suppliers are encouraged to reinforce the retailer’s positive achievements while countering the results of some of its recent assortment decisions.

Opportunities exist for suppliers that drive the retailer’s omnichannel efforts, particularly by emphasizing the “endless aisle” online. Suppliers should also take advantage of the narrowed price gap between private and national brands and build baskets from its existing guests through layered offers including Cartwheel, REDcard Rewards, Pharmacy Rewards, among other Target priorities.

To receive a copy of the latest Kantar Retail pricing study, please contact Katherine Clarke at [email protected].