Thursday, March 2, 2017
Wal-Mart Stores Inc. is running a new price-comparison test in at least 1,200 U.S. stores and squeezing packaged goods suppliers in a bid to close a pricing gap with German-based discount grocery chain Aldi and other U.S. rivals like Kroger Co., according to a Reuters report.
Citing four vendor sources familiar with the moves, the news report says Walmart launched the price test across 11 Midwest and Southeastern states such as Iowa, Illinois and Florida, focusing on price competition in the grocery business that accounts for 56 per cent of the company’s revenue.
Walmart’s tests are aimed at finding the right price point across a range of products that will attract more shoppers, and then adjusting prices as needed. Spot checks by Reuters on a basket of grocery items sold by Walmart and competing Aldi stores in five Iowa and Illinois cities showed Walmart’s bid to lower prices is already taking hold. Walmart consistently offered lower prices versus Aldi, an improvement over recent analyst estimates that Walmart’s prices have been as much as 20 per cent higher than Aldi on many grocery staples.
Vendors quoted in the Reuters article said that Walmart expects suppliers to help the company beat rivals on head-to-head pricing 80 per cent of the time.
These Walmart moves signal a new front in the price war for U.S. shoppers, as the pioneer of everyday low pricing seeks to regain its competitive pricing advantage in traditional retailing.