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Kantar: Target Presses Price Gains At Walmart’s Expense

Target is narrowing the gap with Walmart on price, according to a Kantar Retail pricing study, but the Bentonville-based behemoth still maintains its lead. In the market research firm’s semi-annual pricing study, Walmart’s overall branded basket rang in 2.4% less expensive than Target’s shopping cart.

Particularly when it comes to food, Walmart’s price advantage may not be as big a factor with some consumers in its narrower range. Kantar noted that Target’s edible basket was within six cents of that at Walmart, although Target shoppers might have to be a little sharper to take advantage of the temporary price cut promotions that help them approach the Walmart prices.

The 10th iteration of the semi-annual mass-market channel pricing study compares a list of grocery and consumable items that includes national brands and a sub-set of private label items, Kantar pointed out. Kantar Retail representatives revisited the same co-located Walmart and Target stores in the Northeastern United States in June 2013 as they did in the past to reassess a previously established basket of national brand items including edible grocery, non-edible grocery, and health & beauty aids items. The study assessed only identical SKUs, Kantar asserted.

“The two retailers continue to strategically diverge in how they reach relative basket comparability, with Walmart very much focused on building a strong value proposition through EDLP,” Robin Sherk, director of retail insights for Kantar Retail and leading contributor to the study, commented in announcing the study results. “In contrast, Target selectively relies on temporary discounts to narrow the gap, and then offers guests ways to save even more through loyalty programs such as its REDcard,” she adds.

Walmart’s edible grocery basket was only six cents cheaper than Target’s, so that the 14.1% lead Walmart enjoyed in January 2013 whither almost to elimination. Target achieved near comparability through four temporary price cuts.

“Target’s ability to match Walmart’s pricing in a department where Walmart has focused its price leadership efforts is most impressive,” Sherk said.

Other study highlights include, according to Kantar:

  • Only Target’s HBA sub-basket led Walmart in price.  
  • On an individual item basis, Target’s basket narrowed the spread recorded in January, as only 19% of the items in the two retailers’ baskets were more than 10% pricier at Target in this study iteration.    
  • Target narrowed prices primarily through TPCs while Walmart maintained its lead through everyday low prices, with its basket recording only one Rollback promotional price.
  • Target increased its TPC use to 10 items, up from seven in January 2013.
  • With the 5% Rewards loyalty program discount, Target’s overall basket would have been 2.7% less expensive than Walmart’s.
  • Although Target continues to offer its REDcard holders a very competitive basket price as regards the non-edible grocery sub-basket, the most recent study demonstrates the segment would still ring in 3.5% more expensive at Target.

In addition to checkout results, Kantar said that its study examines how the retailers’ stances are evolving as Target begins to expand appeals beyond its so-called best guests and Walmart continues to assert its productivity loop and invest in shelf prices.

To improve its price positioning, Walmart continues to focus on the productivity loop, affirm price impression and emphasize value for money offered. As a result, suppliers should expect heightened pricing pressure form Walmart as it drives separation locally, Kantar maintained. It suggested that suppliers should monitor price contenders market-by-market and account for non-conventional competitors such as Aldi when assessing business with Walmart. They also should anticipate an increased emphasis on “save money” appeals to drive excitement and customer traffic. Suppliers may want to align with Walmart’s complementary private labels to deliver some unique value, Kantar indicated.  Walmart’s digital promotions, particularly mobile coupons, also offer suppliers an opportunity to further the retailer’s value assertions, the company pointed out.

Target has shifted to a more balanced proposition— as per its slogan Expect More. Pay Less— to incentivize more trips from all guests, not just the core consumers that are the focus of its loyalty program, Kantar observed. The retailer is placing greater emphasis on savings to boost shrinking shopper penetration and an overall drop in transactions. To support Target, suppliers should consider investing in lower everyday pricing on key SKUs to help the retailer improve price perception rather than dramatic TPCs, Kantar maintained. It added that suppliers might invest to reinforce Target’s REDcard savings on shelf tags and checkout receipts, too.