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April 12, 2018Is a Grocery Price War Brewing?
The Lempert Report: A study pointed out a narrow price gap among online grocers[youtube https://www.youtube.com/watch?v=xI0-ZQCGY0E]As the grocery industry struggles to find its next act by adding grocerants, dietitians, clothing boutiques and other services, a new report from Profitero may be a precursor to what comes next: a price war.
In Price Wars: Grocery, Household & Beauty, Profitero analyzed pricing for 21,000 products in grocery, beauty and household supplies, finding only a 1.8% average difference between Walmart’s and Amazon’s prices for grocery. Target and Jet.com were both found to be on average about 6% higher in grocery than Amazon.
Are we about to see a shift back to retailers focused on price—and at what cost to building a relationship with shoppers? Here’s what else they found.
- Walmart is getting aggressive with price matching. The retailer matched Amazon prices on 53% of all CPG products studied, and 67% in grocery.
- The Amazon Prime Pantry program is paying off, helping to create price separation from the competition. Prices on products listed in the Prime Pantry program average about 11% less than those found at other retailers.
- Jet.com is now nipping at Amazon’s heels in the beauty category with a price gap of just 1.4% between the two. Walmart beauty prices averaged about 5% more, while Target was almost 7% higher.
- Specialty retailers continue to lose ground in the battle for price supremacy. Online beauty prices at Walgreens.com and CVS.com averaged about 30% higher than Amazon.
“Amazon still reigns as the low-price leader online, but it’s evident that Walmart is making grocery a key battleground for challenging that leadership,” said Keith Anderson, SVP of strategy and insights at Profitero. “Our latest study confirms that price gaps in online grocery are much narrower than what we found to be the case across other non-grocery categories. Walmart is clearly positioning to win shopper loyalty through aggressive pricing on everyday household essentials.”
