Kantar Retail released its annual price leadership study between mega retail competitors Wal-Mart and Amazon on (Oct. 30), and the results show Walmart.com had lower prices over its supercenter format and Amazon.
Price wars are the primary focus among all retailers — physical and digital formats alike, despite unequal operational costs between brick and mortar and online-only.
Retail experts say consumers don’t think in shopping channels. Instead, they think of the retailer — Amazon, Wal-Mart, Best Buy, and others. Wal-Mart marketing executive Stephen Quinn recently said retailers must connect with consumers on a brand level in multiple formats and price matters more than ever.
While historically the Wal-Mart supercenter has dominated from a price-point perspective, this year’s findings indicate a shift to more alignment between Walmart.com and the supercenter, with aggressive pricing in general merchandise on Walmart.com yielding the most competitive offer overall across the three venues, according to the Kantar study.
“From a brick and mortar standpoint, Wal-Mart has long held a reputation as a price leader,” noted Anne Zybowski, vice president with Kantar Retail and contributor to the study. “While Wal-Mart looks to offer consistently low prices across channels, it is also contending with the dynamic pricing realities online retail entails.”
The Wal-Mart supercenter’s basket was 5% more expensive than the Walmart.com basket, Kantar reported. While the gap between the supercenter and Walmart.com basket is narrower this year, the advantage for Walmart.com is a reverse from last year’s iteration of the study when the supercenter was 7% cheaper.
Walmart.com execs have said they aggressively match or beat prices with all of its major online competitors and that is something they have pushed over the past year using technical algorithms. They have also added 1 million extra items to the online store which now boasts 7 million items for sale.
That said, the message from Bentonville for Wal-Mart Supercenters has been that it has the lowest basket prices among its physical competitors daily and weekly. The unveiling of Savings Catcher helped to reinforce that promise on grocery and household consumables, and now includes top toys for the holiday with possibly other selective general merchandise, namely top gift items.
If consumers really don’t look at where they buy a product, it stands to reason that Wal-Mart prices should be the same, despite the higher operational costs of brick and mortar. Wal-Mart has routinely said it doesn’t match its online prices for in-store items, but admitted Thursday (Oct. 30) that there are some discussions and tests about that possibility. It is not clear if that’s for holiday only, or if it could be an everyday service. The test which began last month in five markets, including Northwest Arkansas, also involves price matching with other online retailers within Wal-Mart brick and mortar stores, something Target and Best Buy already do.
Kantar said Amazon’s basket was 12% more expensive than the supercenter’s and 17% more expensive than Walmart.com’s, ranking it the most expensive in three of four sub-basket categories including edible grocery, where the retailer was 37% more expensive than both Walmart channels.
Zybowski said Amazon has built its mission around the customer, seeking to be competitive on price yet win through its vast assortment and focus on convenience.
“As shoppers increasingly incorporate digital and eCommerce into their purchase decisions, retailers are adopting more nuanced approaches that go beyond low price,” she added.
Kantar reported that third party items in the edible and non-edible baskets drove Amazon’s overall basket cost higher. The study found Wal-Mart supercenter to have the lowest edible grocery cost at $141.38, compared to $141.45 at Walmart.com and $195.29 at Amazon.
Non-edible grocery was also cheaper at the supercenter ($121.49) versus $124.79 at Walmart.com and $155.21 at Amazon. The health and beauty aids category basket was also owned by Wal-Mart supercenter at $110.03 versus $111.61 at Walmart.com and $133.22 at Amazon, according to the study.
It was general merchandise pricing that pushed Walmart.com ahead of the supercenter by a $32.17 margin. These respective cohorts logged general merchandise basket costs of $200.31 and $232.38, respectively, and both were more expensive than the $196.02 general merchandise basket at Amazon, Kantar noted in the study.
Total basket costs at Walmart.com were $578.06, or $27.22 cheaper than the Wal-Mart supercenter ($605.28) and $100.65 savings over Amazon ($678.74), the study found.
“The results of this year’s study are not entirely unexpected,” Zybowski. said. “Amazon continues to hone its prices in the face of increased cross-channel and online competition, while Wal-Mart evolves its alignment between its store and online positions.
Kantar said the supercenter used in this study is in New England and was the same store used last year. The basket totaled 53 national brands — all of which were available at all three outlets. This study doesn’t include shipping costs or subscription discounts that online retailers offer.