Dollar General, Walmart Even in Kantar Opening Price Point Study

Beating out a range of competitors, including Aldi, Family Dollar and Stop & Shop, Dollar General and Walmart have tied for the least expensive overall basket, at $27 each, in Kantar Retail’s “Opening Price Point (OPP) Study.” The survey from Boston-based Kantar Retail aims to find out how select retailers meet the grocery and consumable needs of shoppers in search of the lowest absolute shelf prices.

As well as overall basket price, the survey analyzed each retailer on edible baskets, nonedible baskets, and HBC sub-baskets.

Additional findings were as follows:

• While Dollar General's edible sub-basket was 99 cents cheaper than Walmart's, Walmart had better pricing on the nonedible, at $7.24 compared with Dollar General’s $8.
• Dollar General tied for the lowest overall nonedible basket price, but it didn’t lead any of the sub-baskets. Save-A-Lot had the cheapest edible, at $10.90; Walmart had the cheapest nonedible, at $7.24; and Family Dollar had the cheapest HBC sub-basket, at $5.
• Family Dollar had the most expensive edible sub-basket, at $16.81, 54 percent higher than the Save-A-Lot basket. Despite that, Family Dollar’s pricing dropped 5.2 percent year over year.
• Promotional activity was low and had minimal impact on the overall results. Of the product/retailer combinations analyzed, just 12 items had promoted prices although this was an increase from nine last year.
• Private label products had a considerable effect on overall basket pricing, with such items comprising an average two-thirds of any retailer's basket. Family Dollar was the lowest, at 52 percent, while Aldi was the highest, at 96 percent.
• For all retailers, nonedible categories seemed key to delivering shopper value. Of all prices recorded in the nonedible sub-basket, 63 percent were $1 or under.
• Over the six years of the study, OPP overall basket prices of retailers in the study have grown 11 percent. Walmart experienced the smallest increase over time, at 4.3 percent, while Stop & Shop grew the most, at 20.8 percent.

“While Dollar General and Walmart have battled for OPP price leadership over the last several years, the tie between the two retailers at $27 this year is notable because Dollar General’s OPP basket price increased slightly over last year, while Walmart posted a more substantial $1.08 year-over-year decrease,” wrote Director Mike Paglia in the report. “This result reflects not only Walmart’s recently renewed price investments, but also increased pressure on Dollar General to improve margins.”

Added Paglia: “The upward trend in Dollar General’s OPP basket price is troubling. Unbeatable low prices have been a core pillar of its value proposition for years, but these results suggest that the retailer may be losing ground. Low prices are a core requirement for low-income shoppers who will take them wherever they can find them. Retaking the lead may require Dollar General to invest some of its growing gross margin or find operating expense savings to invest in price.”

He suggested that with further competition in the offing in the shape of Lidl, slated to debut in the United States by 2018, “Walmart should consider developing clearer and more consistent private label pricing and brand messaging — with special attention to its multiple OPP products in grocery.”

For Stop & Shop, which maintained its “middle-of the-road price positioning,” Paglia recommended “making deep, selective price investments on select items to improve overall perception [as] a positive first step.

Family Dollar, which has struggled to re-establish its price competitiveness since its 2015 acquisition by Dollar Tree, “will have to work harder to regain the shopper’s trust,” he noted, while Aldi’s relatively higher price positioning, a reflection of “its efforts to appeal to slightly more affluent shoppers with an enhanced assortment,” “is problematic from an OPP perspective.”

Finally, with regard to Save-A-Lot, which came in last, Paglia observed that its “soon-to-change corporate structure will likely have an impact on the retailer’s go-to-market strategy.”