Walmart’s Basket Pricing Edges out Target by 4%

Walmart’s “self-funded” price investments are driving increased basket “price separation” from Target, according to Kantar Retail’s semi-annual pricing study. With an overall branded basket 4 percent less expensive than Target’s, Walmart assumes the strongest overall lead since the study’s inception in 2009.

While strategic price discounts on key items continue to be a cornerstone of Target’s price competitiveness -- rather than everyday low prices -- Target’s overall basket has not been lower than Walmart’s since the January 2011 iteration of the study.

“While the two retailers’ baskets are still closely priced, Walmart has managed a consistent lead since early 2011,” said Leon Nicholas, SVP with Kantar Retail and contributor to the study. “Its positioning is underpinned by management’s revived focus on EDLP. In contrast, Target offers its best prices for guests willing to commit to value in the longer term by stocking-up, realizing gift card values on a return trip, and signing up for a REDcard,” Nicholas added. “This price separation is a key strategic piece of Walmart’s efforts to shore up shopper traffic and drive its 'save money' brand proposition.”

Highlights of Kantar’s study include:

• Walmart’s overall branded basket was 4 percent less expensive than Target’s and each of Walmart’s sub-baskets registered less expensive than Target’s.
• Walmart’s edible grocery basket was 14.1 percent less expensive than Target’s, the strongest recorded price gap in the history of the study. While Walmart’s HBA basket retained its 4 percent price gap, Walmart’s edible grocery basket substantially reversed its position since the June 2012 assessment.
• On an individual item basis, Walmart’s basket widened the spread. Nearly one-third of the items were more than 10 percent less expensive at Walmart, the largest proportion of Walmart’s basket items to assert a 10 percent spread over Target’s since the study began.
• Walmart achieved its basket position without Rollbacks. Walmart’s basket recorded no price promotions in this iteration while Target posted a total of seven temporary price cuts (TPCs). Strategic price discounts on key items continue to be a cornerstone of Target’s price competitiveness, rather than everyday low prices.
• Target’s overall private label basket was 12.2 percent more expensive than Walmart’s. Walmart continues to hold a competitive private label basket, as it was the same price or cheaper than Target’s across all of the study’s iterations since 2009.
• With 5 percent Rewards, Target’s basket would have been 1.1 percent less expensive than Walmart’s. Though Walmart’s total basket was less expensive than Target’s, Target continues to offer a very competitive basket price to its REDcard holders.

Kantar’s 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. Kantar’s most recent study examines how these retailers’ positions are evolving as Walmart’s “self-funded” price investments are manifesting in the market and Target further focuses on its best guests.

Kantar Retail works with leading branded manufacturers and retailers to help them transform the purchase behavior of consumers, shoppers and retailers through the use of retail insights, consulting, analytics and organizational development.