Walmart private label reaches new highs

Walmart recently promised to lower your food bill, but an independent analysis found prices of its private-label products at an all-time high.

In March, Reuters reported Walmart would provide financial relief to its shoppers by reportedly pressuring food suppliers to keep the wholesale prices low on everything from soda to cereal.

In April, Raymond James and Associates did its quarterly reporting on total basket items for Walmart, Target and Publix to find mixed results.

The Great Value, Walmart’s private label, “basket” increased 1.7% to $147.95. This is a new high price for the private label basket in the history of the Raymond James and Associates survey.

The branded basket for Walmart, averaging 48-items was 4.1% less expensive compared to Target. Versus Publix, the Walmart basket was 18.6% less expensive in April, down from 20% in March and falling 14.9 % from April of last year.

The comparisons come at a time when Walmart is trying to reclaim its image as the nation’s low-price leader. It has lost ground as the expansion of dollar stores and Aldi has eaten into the discounter’s market share.

Bentonville-based Wal-Mart Stores reported heavy traffic to start 2012 with positive same-store sales growth of 1.8% in the quarter ending Jan. 31. But Wal-Mart CEO Mike Duke warned investors in February the company expects margins to decline as it continues its low-price strategy.

John Lawrence, retail analyst with Morgan Keegan, said the retailer’s focus to get consumers back in the stores is working. He predicts it will take a little longer for some of the company’s pricing strategies to pay off. But he believes the hard part of the equation has been solved.

Walmart claims an estimated 25% share of the U.S. supermarket business and might do more price comparisons in the grocery aisle to increase its share.
 
With any price savvy shopper, it seems the truth lies in what you buy. On a recent citizen shopping trip to Walmart and Aldi, on the same day, proved to be a mixed bag in basket savings.

For a gallon of 2% milk, Walmart’s price was $2.98, Aldi was $2.69. The price of bananas was the same for both retailers at 44 cents per pound. Private label honey wheat bread was close with Walmart’s priced at $1.28 and Aldi at $1.29. The differences came with the private label white bread with Walmart at $1.28 and Aldi at 89 cents.

Price checking down the snack aisle proved costly for Walmart. Private label 8 ounce-bag of tortilla chips for Walmart rang in at $1.67 and Aldi $1.19. Walmart’s 8 ounce-bag of cheese puffs costs $1.67, and at Aldi 99 cents.

When combining branded products or the private label alternative, according to the Raymond James report, prices increased sequentially at Walmart by 1.1% and 0.7% higher at Publix. Prices declined 0.4% sequentially at Target.

At the time of The City Wire survey in April, the low price basket at Walmart was 11.5% less expensive than at Target versus 12.7 % in March and 11.8 % a year ago.

Compared to Publix, Walmart’s advantage was 18.4% in April, versus 18.7% in March and 20.3% in April 2011.

In addition to surveying prices for grocery and health and beauty aids, Raymond James also made several non-price observations citing that the availability of merchandise improved during the store visit. In March, it was noted that several items were missing.

“As we expected, store management corrected this error,” analysts noted.

The ongoing focus on “on-shelf availability” at Walmart is reflected in the store experience, according to the analyst survey. The report also stated sales results across the retail sector were bolstered by warm weather and heavier traffic levels across the U.S.

Walmart did not provide confirmation about its new pricing policy for this story.
 
Wal-Mart will report its second quarter earnings May 17. Analysts expect the company to earn $1.04 per share, up from 98 cents per share a year ago.