Walmart Launching Grocery War Against Aldi
Walmart Stores is currently running a new test of price comparison in 1,200 or more stores in the U.S. and squeezing suppliers of packaged goods in an attempt to close the gap in pricing with Aldi the chain of discount grocery stores based in Germany along with other rivals in the U.S. such as Kroger.
The pricing test was launched by Walmart across 11 states in the Southeast and Midwest such as Florida, Illinois and Iowa. The test focuses in price competition in the U.S. grocery business that represents 56% of the revenue at the company, said one source with vendors that supply the retailer.
Tests at Walmart have a goal of finding the correct price point for a range of different products that would attract more consumers and then adjust the prices where needed.
It appears in some of the stores that the lower prices that Walmart is putting on products are taking hold. The Arkansas based company is consistently offering prices that are lower versus those of Aldi, which is a change from other analyst estimates that prices at Walmart were as much as 20% higher to those of Aldi on a number of staples in the grocery aisle.
The competition is intense at the stores that were tested by the market analyst.
The retailer held meetings as well last week with vendors of consumer and food products including Unilever, Proctor & Gamble and Conagra Brands demanding they lower the prices for the retailer by as much as 15%.
Walmart has said that it is expecting its suppliers to help it beat its rivals on pricing head to head 80% of the time, said sources involved with its vendors.
The meeting with its suppliers, where other topics were also discussed, was attended by Kraft Heinz, Johnson & Johnson amongst other companies.
The companies specializing in consumer goods did not respond to requests for comments.
These moves by Walmart signal a new form of the current price war for shoppers in the U.S. as the everyday low pricing pioneer looks to regain its pricing advantage across traditional retailing.
Walmart, for over one year has said it is making an investment in price, but has not shared many specifics. When the company was asked about its demands on suppliers of groceries, a spokesperson said the company did not share its strategy due to competitive reasons.
Get Analysts' Upgrades and Downgrades Daily - Enter your email address below to receive a concise daily summary of analysts' upgrades, downgrades and new coverage with MarketBeat.com's FREE daily email newsletter.