New report shows Dollar General edges out Walmart for lowest opening prices

Cash strapped consumers looking for the rock bottom prices and the lowest opening price points may get a better deal at Dollar General than at Wal-Mart or Aldi, according to a basket challenge recently completed by Kantar Retail.

It’s the third year Dollar General has edged Bentonville-based Wal-Mart Stores with the least expensive basket in the annual opening price point survey.

For shoppers on tight budgets, the value offered by bundled solutions or multi-packs with low price to volume ratios is not relevant given the relatively high cash outlay required at the time of purchase, noted Kantar analyst Mike Paglia. He said these shoppers tend to seek out opening price points in order to make the most of their tight budgets. Kantar looked at 21 categories across edible grocery, non-edible grocery and health and beauty aids (HBA).

The overall basket purchase tallied $26.75 at Dollar General. This was 2.5% more than the same basket at Wal-Mart. Kantar said the 66-cent basket price gap widened from the 12 cents that separated the two competitors last year.

BASKET RESULTS
$26.75: Dollar General
$27.41: Wal-Mart
$29.80: Family Dollar
$35.26: Aldi
$40.61:Target

In a change from previous years, Kantar notes the non­edible basket drove Dollar General’s total basket lead over Wal-Mart. They also note that Wal-Mart’s edible grocery and HBA sub­baskets were less expensive than at Dollar General this year.

Kantar said while the total basket was cheapest at Dollar General, the lowest entry price differed in each sub-basket. Aldi proved to have the lowest prices in the edible category at $9.77, a full $2.78 cheaper than Dollar General and $1.34 cheaper than at Wal-Mart. The edible foods purchased included: Cereal, dry spaghetti, canned tuna, bread, milk, peanut butter, canned vegetable, ketchup and pasta sauce.

Wal-Mart and Target were the two most expensive among the five retailers for cereal. Wal-Mart had the lowest opening prices on dry pasta, peanut butter, canned vegetable and ketchup. For milk and bread Aldi was the price leader at $1.49 and 89 cents, respectively. Aldi’s milk price was 85% cheaper than the Dollar General price, equating to a savings of $1.26. The savings were 87 cents over the cost of milk at Wal-Mart and $1.71 for milk at Family Dollar.

Bread was another item with wide price swings. Shoppers saved 49 cents on bread at Aldi, over Wal-Mart’s opening price of $1.38. The cost for bread at Dollar General was $1.25, while Target’s lowest bread price was $2.39.

Kantar notes there were eight price promotions at multiple retailers in the edible category. Price promotional activity was believed to help Dollar General the most with large mark downs in dry pasta and peanut butter. The study said without those promotions Wal-Mart would have achieved the lowest overall basket.

Dollar General was the clear winner in the non-edible category with a sub-basket total of $9.50. That was $2.29 less expensive than Wal-Mart and $1.94 cheaper than Aldi. Target’s sub-basket cost $7.05 more than Dollar General. The sub-category included: Toilet paper, paper towel, liquid dish soap, liquid laundry soap, blue window cleaner and diapers. Kantar said there were no promotions in this category.

Wal-Mart took the lead in the HBA category with a sub-basket of $4.51. The items included: Bar of soap, tooth paste, shampoo, pain reliever and a disposable razor. The Wal-Mart price was 49 cents cheaper than Dollar General and a whopping $9.54 cheaper than Aldi. Kantar said this is the third year that Family Dollar and Dollar General had identical prices in this category which is indicative of the running fight for opening price point leadership between the two competitors.

Paglia said although Dollar General’s basket continued its overall opening price leadership, its lead is by no means commanding. He said retailers in the study are each focused on competitive pricing whether using promotions like Target and Dollar General or price roll backs and private label options like Wal-Mart.

Taken together, the low-income shopper has an array of credible options when it comes to selecting outlets that meet her basket requirements, Kantar reported. Given the variability among retailers in leading each of the three sub-baskets, shoppers appear best served by cherry picking multiple retailers rather than leveraging a one-stop shop.

Such a routine favors the shopper who is willing to compare prices on a regular basis and swap destinations for a particular item as necessary. Retailers who are able to provide actual and perceived price leadership, in part through opening price points, will win wallet share with this large shopper segment.

Wal-Mart’s Savings Catcher program is not a catch-all tool for the most frugal of shoppers as the program only compares sale prices of competitors and it does not include private label products.