Who is the Online Price Leader for Grocery?

To examine online competition, Barrington, Ill.-based retail consultancy Brick Meets Click constructed baskets consisting of 34 commonly purchased grocery products across competitors offering online service in the Los Angeles metropolitan area. The data reflect online prices collected on Jan. 18, 2018, and exclude service fees and taxes. 

Here are the top-line headlines from the analysis:

  • Aldi extends its price leadership to the digital domain.  At $83, Aldi’s online basket costs 4.5 percent less than Walmart’s, driven by aggressive pricing in perishables departments, notably produce and dairy, but also frozen foods. Its dominant price position is likely to attract many value-conscious online shoppers where it’s available. (Aldi is currently testing the service in three markets.)
  • Walmart is the one to watch.  Even though it trails Aldi, Walmart’s $87 online basket beats the other competitors, and it's much further along in rolling out the service. Walmart was 7 percent lower compared to value-retailer Smart & Final, 15 percent and 23 percent less than conventional grocers Stater Bros. and Ralph’s, respectively, and more than 30 percent less expensive than Amazon Fresh. While Walmart provides strong value across departments, it owns nonfoods and health and beauty care, where it beats even Aldi. 
  • Amazon is more expensive than most.  At $126, Amazon Fresh is 44 percent more expensive than Walmart, and 11 percent and 23 percent more expensive than conventional grocers Ralph’s and Stater Bros., respectively. Whole Foods, at $137, is 9 percent higher than Amazon Fresh. The gap between Whole Foods and Amazon Fresh could widen if Amazon Fresh adds more 365-branded SKUs – unless, of course, further price cuts are made at Whole Foods.

This analysis highlights that Amazon will likely need to make additional moves with pricing and assortment if it wants to grow average sales per transaction and capture an even larger share of online grocery spending via Amazon Fresh and Whole Foods.

For more insights and implications from this analysis, click here.

About the Author

David Bishop

David Bishop is a partner at Barrington, Ill.-based retail consultancy Brick Meets Click.

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