Wal-Mart Pricing Report: Round XXIII
June 1, 2012 | 19 min to read
In Savannah, Kroger Beats Wal-Mart in Produce Pricing
Have Kroger and other chains cracked the code on Wal-Mart pricing or is this a one-hit-wonder?
After ten years of studying Wal-Mart’s produce pricing and the impact it has on the pricing policies of other chains in cities where Wal-Mart operates, the Produce Business Wal-Mart Pricing Report has rolled into Savannah, GA, and something that has never happened before has now happened.
A large scale, mainstream supermarket chain, namely The Kroger Co., beat out Wal-Mart, coming in 2 percent lower than Wal-Mart on produce pricing…. well, sort of.
We add that “sort of ” caveat because if you merely add up the “listed” prices on our market basket, then Wal-Mart would have still been slightly cheaper, but in order for Kroger to show up cheaper, you have to use the Kroger cardholder prices.
Now, normally, this would be against our policy. We typically use only prices available to the general public, and in the case of two other stores that had less than a handful of items discounted with their loyalty cards — Food Lion and Piggly Wiggly — we held to our policy of reporting only non-card prices.
We sometimes publish special loyalty card prices but only as a separate chart and for background information. In the case of Kroger, however, we were confronted with a new situation. Although loyalty card prices normally are available only to loyalty card holders – and indeed in many stores, cashiers passing on loyalty card prices to those who don’t have loyalty cards is a firing offense — there are exceptions.
Typically, requiring people to do at least some registration is important to chains as only with registration does the data generated become valuable.However, sometimes other concerns trump the chain’s desire to use discount prices to get people to register. Often stores in areas with a great deal of tourism, for example, particularly tourism that involves visitors from areas where a given chain does not have stores, find that the tourists resist registering for a card in an area where they don’t live. The tourists also resist paying inflated prices.
Wal-Mart Supercenter vs 5 Chains
Price Comparison — Savanah, Georgia
November 2012 – Prices Available To The General Public
| STORE NAME | WALMART | FOOD LION | FRESH MARKET | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Produce Item | How Priced | Regular Price* |
Regular Price* |
% Over Wal-Mart |
Regular Price* |
% Over Wal-Mart |
|||
| Apples – Granny Smith | Lb | 1.67 | 1.79 | 7.19% | 2.49 | 49.10% | |||
| Apples – Other Variety | Lb | 1.67 | 1.79 | 7.19% | 2.49 | 49.10% | |||
| Apples – Red Delicious | Lb | 1.67 | 1.79 | 7.19% | 1.99 | 19.16% | |||
| Asparagus | Lb | 2.48 | 2.09 | —15.73% | 3.99 | 60.89% | |||
| Bananas – Yellow | Lb | 0.53 | 0.54 | 1.89% | 0.69 | 30.19% | |||
| Beans – Green | Lb | 1.96 | 3.99 | 103.57% | 0.98 | —50.00% | |||
| Blueberries | 6 oz Package | 2.98 | 2.50 | —16.11% | 3.33 | 11.74% | |||
| Broccoli – Whole | Each | 2.38 | 1.93 | —18.91% | 1.98 | —16.81% | |||
| Broccoli Crowns | Lb | 1.98 | 2.08 | 5.05% | 2.49 | 25.76% | |||
| Cabbage – Green | Lb | 0.64 | 0.51 | —20.31% | 5.99 | 835.94% | |||
| Cantaloupe – Whole | Each | 2.00 | 1.50 | —25.00% | 3.99 | 99.50% | |||
| Carrots – Baby Lb | Package | 1.78 | 1.87 | 5.06% | 1.69 | —5.06% | |||
| Carrots – Regular | 1 Lb Bag | 0.78 | 0.92 | 17.95% | 1.50 | 92.31% | |||
| Cauliflower | Each | 2.58 | 2.71 | 5.04% | 3.99 | 54.65% | |||
| Celery | Each | 1.28 | 1.45 | 13.28% | 1.99 | 55.47% | |||
| Corn – Yellow | Each | 0.44 | 0.46 | 4.55% | 0.69 | 56.82% | |||
| Cucumbers – Regular | Each | 0.68 | 0.72 | 5.88% | 0.99 | 45.59% | |||
| Dressing – Other | Bottle 11oz | 3.78 | 3.02 | —20.11% | 4.12 | 8.99% | |||
| Grapefruit – Red | Each | 0.70 | 0.65 | —7.14% | 1.50 | 114.29% | |||
| Grapes – Green Seedless | Lb | 2.98 | 2.09 | —29.87% | 3.99 | 33.89% | |||
| Grapes – Red Seedless | Lb | 2.98 | 1.77 | —40.60% | 3.99 | 33.89% | |||
| Green Onions | Bunch | 0.56 | 0.59 | 5.36% | 1.99 | 255.36% | |||
| Jar Fruit – Del Monte | 20 oz Jar | 2.98 | 3.66 | 22.82% | 7.49 | 151.34% | |||
| Lettuce – Iceberg Bulk | Each | 0.60 | 1.24 | 106.67% | 1.79 | 198.33% | |||
| Lettuce – Romaine Bulk | Each | 1.78 | 1.58 | —11.24% | 2.00 | 12.36% | |||
| Limes – Bulk | Each | 0.35 | 0.20 | —42.86% | 0.50 | 42.86% | |||
| Mangos | Each | 0.78 | 1.05 | 34.62% | 1.00 | 28.21% | |||
| Mushrooms – White Pkg | Pkg Wgt: 8 oz | 1.78 | 1.87 | 5.06% | 2.99 | 67.98% | |||
| Onions – Sweet | Lb | 0.98 | 0.99 | 1.02% | 2.49 | 154.08% | |||
| Onions – White | Lb | 1.24 | 1.30 | 4.84% | 2.49 | 100.81% | |||
| Onions – Yellow Bag | 3 Lb | 2.26 | 2.37 | 4.87% | 2.99 | 32.30% | |||
| Oranges – Navel | Each | 0.54 | 0.72 | 33.33% | 0.74 | 37.04% | |||
| Oranges – Navel | 4 lb Bag | 4.48 | 3.65 | —18.53% | 4.99 | 11.38% | |||
| Pears – Bartlett | Lb | 1.67 | 1.23 | —26.35% | 1.98 | 18.56% | |||
| Peppers – Green Bell | Each | 0.74 | 0.72 | —2.70% | 0.99 | 33.78% | |||
| Peppers – Red | Each | 1.68 | 1.50 | —10.71% | 2.50 | 48.81% | |||
| Pineapple | Each | 2.98 | 3.19 | 7.05% | 3.98 | 33.56% | |||
| Potatoes – Russet | Bag 5 Lb | 3.47 | 3.12 | —10.09% | 5.99 | 72.62% | |||
| Potatoes – Russet Bulk | Lb | 0.88 | 0.79 | —10.23% | 1.29 | 46.59% | |||
| Salad – Caesar | 15 oz Bag | 3.38 | 10.47 | 209.76% | 7.47 | 121.01% | |||
| Salad – Spring | 11 oz Bag | 4.48 | 5.92 | 32.14% | 4.11 | —8.26% | |||
| Squash – Zucchini | Lb | 2.18 | 1.05 | —51.83% | 1.99 | —8.72% | |||
| Strawberries Pkg | 1 Lb | 1.98 | 2.00 | 1.01% | 3.99 | 101.52% | |||
| Sweet Potatoes | Lb | 0.88 | 0.79 | —10.23% | 1.49 | 69.32% | |||
| Tomatoes – On the Vine | Lb | 2.28 | 1.99 | —12.72% | 2.99 | 31.14% | |||
| Tomatoes – Plum/Roma | Lb | 1.38 | 1.51 | 9.42% | 1.99 | 44.20% | |||
| Tomatoes – Regular Large | Lb | 1.74 | 1.83 | 5.17% | 2.49 | 43.10% | |||
| MARKET BASKET | 85.99 | 91.50 | 6.41% | 129.57 | 50.68% | ||||
| Red is adjusted price where package weight is different but can be adjusted for proper comparison. | |||||||||
| STORE NAME | WALMART | KROGER | PIGGLY WIGGLY | PUBLIX | |||||
|---|---|---|---|---|---|---|---|---|---|
| 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 | 1.67 | 1.79 | 7.19% | 1.89 | 13.17% | 1.99 | 19.16% | |
| Apples – Other Variety | Lb | 1.67 | 1.28 | —23.35% | 1.99 | 19.16% | 1.49 | —10.78% | |
| Apples – Red Delicious | Lb | 1.67 | 1.39 | —16.77% | 1.99 | 19.16% | 1.49 | —10.78% | |
| Asparagus | Lb | 2.48 | 2.99 | 20.56% | 3.99 | 60.89% | 3.99 | 60.89% | |
| Bananas – Yellow | Lb | 0.53 | 0.69 | 30.19% | 0.69 | 30.19% | 0.69 | 30.19% | |
| Beans – Green | Lb | 1.96 | 1.99 | 1.53% | 1.00 | —48.98% | 1.29 | —34.18% | |
| Blueberries | 6 oz Package | 2.98 | 2.50 | —16.11% | 2.99 | 0.34% | 3.99 | 33.89% | |
| Broccoli – Whole | Each | 2.38 | 1.99 | —16.39% | 2.00 | —15.97% | 2.69 | 13.03% | |
| Broccoli Crowns | Lb | 1.98 | 1.99 | 0.51% | 1.99 | 0.51% | 3.29 | 66.16% | |
| Cabbage – Green | Lb | 0.64 | 0.49 | —23.44% | 0.69 | 7.81% | 0.69 | 7.81% | |
| Cantaloupe – Whole | Each | 2.00 | 2.00 | 0.00% | 3.99 | 99.50% | 2.50 | 25.00% | |
| Carrots – Baby Lb | Package | 1.78 | 1.99 | 11.80% | 1.99 | 11.80% | 1.99 | 11.80% | |
| Carrots – Regular | 1 Lb Bag | 0.78 | 0.89 | 14.10% | 1.00 | 28.21% | 0.99 | 26.92% | |
| Cauliflower | Each | 2.58 | 2.50 | —3.10% | 2.00 | —22.48% | 2.69 | 4.26% | |
| Celery | Each | 1.28 | 1.45 | 13.28% | 1.79 | 39.84% | 1.69 | 32.03% | |
| Corn – Yellow | Each | 0.44 | 0.55 | 25.00% | 0.66 | 50.00% | 0.17 | —61.36 | |
| Cucumbers – Regular | Each | 0.68 | 0.59 | —13.24% | 0.50 | —26.47% | 0.75 | 10.29% | |
| Dressing – Other | Bottle 11oz | 3.78 | 3.20 | —15.34% | 3.38 | —10.58% | 3.38 | —10.58% | |
| Grapefruit – Red | Each | 0.70 | 0.59 | —15.71% | 1.39 | 98.57% | 1.49 | 112.86% | |
| Grapes – Green Seedless | Lb | 2.98 | 2.99 | 0.34% | 2.99 | 0.34% | 3.99 | 33.89% | |
| Grapes – Red Seedless | Lb | 2.98 | 2.99 | 0.34% | 2.99 | 0.34% | 2.99 | 0.34% | |
| Green Onions | Bunch | 0.56 | 0.59 | 5.36% | 0.79 | 41.07% | 0.60 | 7.14% | |
| Jar Fruit – Del Monte | 20 oz Jar | 2.98 | 3.49 | 17.11% | 3.99 | 33.89% | 3.49 | 17.11% | |
| Lettuce – Iceberg Bulk | Each | 0.60 | 1.25 | 108.33% | 1.79 | 198.33% | 1.49 | 148.33% | |
| Lettuce – Romaine Bulk | Each | 1.78 | 1.99 | 11.80% | 3.99 | 124.16% | 1.89 | 6.18% | |
| Limes – Bulk | Each | 0.35 | 0.33 | —5.71% | 0.50 | 42.86% | 0.66 | 88.57% | |
| Mangos | Each | 0.78 | 1.00 | 28.21% | 1.00 | 28.21% | 0.10 | —87.18% | |
| Mushrooms – White | Pkg Wgt: 8 oz | 1.78 | 1.99 | 11.80% | 1.99 | 11.80% | 1.35 | —24.16% | |
| Onions – Sweet | Lb | 0.98 | 1.00 | 2.04% | 0.99 | 1.02% | 1.29 | 31.63% | |
| Onions – White | Lb | 1.24 | 1.25 | 0.81% | 1.49 | 20.16% | 1.99 | 60.48% | |
| Onions – Yellow Bag | 3 Lb | 2.26 | 2.29 | 1.33% | 1.88 | —16.81% | 2.99 | 32.30% | |
| Oranges – Navel | Each | 0.54 | 0.69 | 27.78% | 0.99 | 83.33% | 0.99 | 83.33% | |
| Oranges – Navel | 4 lb Bag | 4.48 | 3.00 | —33.04% | 3.00 | —33.04% | 4.99 | 11.38% | |
| Pears – Bartlett | Lb | 1.67 | 1.89 | 13.17% | 1.99 | 19.16% | 0.99 | —40.72% | |
| Peppers – Green Bell | Each | 0.74 | 0.59 | -20.27% | 0.99 | 33.78% | 0.75 | 1.35% | |
| Peppers – Red | Each | 1.68 | 1.25 | -25.60% | 3.99 | 137.50% | 3.99 | 137.50% | |
| Pineapple | Each | 2.98 | 2.50 | —16.11% | 3.99 | 33.89% | 4.99 | 67.45% | |
| Potatoes – Russet Bag | 5 Lb | 3.47 | 3.69 | 6.34% | 2.99 | —13.83% | 3.99 | 14.99% | |
| Potatoes – Russet Bulk | Lb | 0.88 | 0.99 | 12.50% | 1.00 | 13.64% | 1.49 | 69.32% | |
| Salad – Caesar | 15 oz Bag | 3.38 | 3.29 | —2.66% | 11.07 | 227.51% | 4.04 | 19.53% | |
| Salad – Spring | 11 oz Bag | 4.48 | 3.49 | —22.10% | 8.12 | 81.25% | 5.50 | 22.77% | |
| Squash – Zucchini | Lb | 2.18 | 1.99 | —8.72% | 1.00 | —54.13% | 1.29 | —40.83% | |
| Strawberries Pkg | 1 Lb | 1.98 | 2.50 | 26.26% | 2.99 | 51.01% | 2.50 | 26.26% | |
| Sweet Potatoes | Lb | 0.88 | 0.99 | 12.50% | 0.99 | 12.50% | 0.99 | 12.50% | |
| Tomatoes – On the Vine | Lb | 2.28 | 1.88 | —17.54% | 1.99 | —12.72% | 3.99 | 75.00% | |
| Tomatoes – Plum/Roma | Lb | 1.38 | 1.49 | 7.97% | 1.59 | 15.22% | 1.89 | 36.96% | |
| Tomatoes – Regular Large | Lb | 1.74 | 84.04 | —2.27% | 108.99 | 14.37% | 2.49 | 43.10% | |
| MARKET BASKET | 85.99 | 84.04 | —2.27% | 108.99 | 26.75% | 104.95 | 22.05% | ||
| Red is adjusted price where package weight is different but can be adjusted for proper comparison. | |||||||||
So what is done in these types of situations is often that the cashiers are given cards that they scan for each customer who doesn’t have a card. Such is the situation in the Savannah Kroger we visited. Each time we would check out, we would be asked if we had a loyalty card and when we responded no, the cashier would scan a house card. Since the same behavior of the cashiers was not practiced at Food Lion and Piggly Wiggly, and since Kroger honored the prices of many more items with its loyalty card, we made the call that this procedure constituted offering loyalty card prices to the general public; thus, in this case, Kroger’s loyalty card prices become the actual prices available to the general public.
This means time that Wal-Mart has been beat in prices. The first 20 iterations of the Produce Business Wal-Mart Pricing Study had Wal-Mart winning almost everywhere with its supercenter concept, losing only to more specialized concepts, such as an A&P’s Food Basics in Detroit and a Fiesta Mart in Houston, plus a quirky loss to Wal-Mart’s own NeighborhoodMarket in Dallas due to some in-store specials at a time when official Wal-Mart policy, since abandoned, was that Neighborhood Markets and supercenters had to maintain identical prices.
Now, however, we have a hat trick. Wal-Mart didn’t win in Savannah, losing to Kroger; it was beat out by Sprouts in the last iteration of the Produce Business Wal-Mart Pricing Study, which was done in Dallas, and Wal-Mart was beat out at the previous iteration by Food Basics in New Jersey. Indeed, Wal-Mart has not won the produce pricing war in the last three markets the Produce Business Wal-Mart Pricing Study has visited.
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% |
To be fair, the losses were mostly quite small: 2 percent in Savannah, 1 percent in New Jersey and 7 percent in Dallas, and given the vagaries of the market baskets used, one shouldn’t make too much of small differences. What is clear, however, is that Wal-Mart is no longer obviously and clearly the low price leader and, more specifically, that Wal-Mart executives are not requiring store-level managers to reduce prices to address local competitive situations and thus retain Wal-Mart’s low price image.
Since reputations for price competitiveness have to be built up market by market against specific competitive situations, this willingness to be undersold will erode Wal-Mart’s brand equity in each market. After all, if you can’t count on Wal-Mart to be the least expensive – what can you count on Wal-Mart to be?
Of course, Wal-Mart is still priced quite competitively. In Savannah, although Food Lion is nipping at its heals at just 7 percent over Wal-Mart’s prices, Publix and Piggly Wiggly are steering clear of any price battle, with Publix coming in 22 percent and Piggly Wiggly at 27 percent over Wal-Mart’s prices. Fresh Market, coming in at 51 percent over Wal-Mart, is just proving that one can sell the same products and yet be in a totally different business.
One challenge in doing this type of study is that not all stores sell products the same way. Traditionally, we have to make adjustments because one store may sell things by the “each” while another sells by the pound. In Savannah, we had to make adjustments because Wal-Mart sells things such as a 15-ounce bag of Caesar salad mix, while Food Lion, for example, was selling only a 5-ounce size on the day of our visit. We adjust pricing so as to represent an equal number of ounces. This is fair, but also means that the product represented on the chart – a 15-ounce bag of Caeser salad mix sold at Food Lion for $10.47 doesn’t actually exist. The product available is a 5-ounce bag being sold for 3.49.
In many cases, it is on products where these adjustments have occurred that the big differences in prices exist. In other words, even Fresh Market might be unwilling to sell a parity product such as Del Monte jarred fruit for 151.34 percent over Wal-Mart if consumers could easily compare such prices. But it is willing to charge this much higher price on a per ounce basis because it sells a smaller size and so the product is not deemed directly comparable. So Wal-Mart sells a 20-ounce jar of Del Monte jarred fruit for $2.98, while Fresh Market sells a 16-ounce jar of its private label product for $5.99. On a per ounce basis that is a 151.34% premium, but consumers might still find it difficult to compare both products.
Margin-Enhancers Versus Competitive Weapons
We would say that one area where conventional retailers are remiss is failing to recognize the damage that being out of line on parity products can do to their pricing image. If Food Lion is higher priced on peaches than Wal-Mart, well that doesn’t tell a consumer a lot. Maybe its peaches are larger, sweeter, safer, more local, more sustainable – who knows? But when Food Lion lets Wal-Mart sell 20-ounce jars of DelMonte jarred fruit for $2.98, while Food Lion prices the exact same product/size and thus easily comparable product for $3.66, it is allowing Wal-Mart to imprint a low cost value proposition into the brain of every consumer. It is hard to see why Food Lion executives would let something such as this happen, yet we find all across the country such parity products are viewed as margin-enhancers rather than competitive weapons.
The big question coming out of Savannah is whether Kroger underselling Wal-Mart is a crack in the dam or just a quirk. We knew Wal-Mart’s low price leadership was eroding due to competition with Aldi, Save-a-Lot and other deep discounters, but, for the most part conventional supermarkets have most effectively competed with Wal-Mart by getting out of its way. Think of Safeway’s Lifestyle stores representing a move to a more upscale clientele.
The question is whether Kroger and other chains have cracked the code and learned how to make a living and price competitively with Wal-Mart or, put another way, is what we saw in Savannah a one-hit-wonder or is this going to be a national hit parade?
Check out future editions of the Produce Business Wal-Mart Pricing Report to find out.
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