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November 28, 2025
How Great of an Advantage Do Low-Price Leaders Like Walmart and Aldi Have?
Amazon and Aldi appear be fighting it out over the title of the U.S.’s retail low-cost leader. How important is it?
Last week, Amazon declared itself “America’s low-price leader,” citing analysis from Profitero showing that its average prices are 14% lower than 23 online U.S. retailers. Among some key categories, Amazon prices were pegged at more than 5% lower versus its nearest competitor in fashion, packaged foods, home furniture, and books — and 4% lower than close competitors in beauty, electronics, and household supplies.
According to a survey of Amazon users taken in 2021 by delivery management solutions provider Convey, however, the top reason to shop at Amazon is fast, free shipping (73%), followed by “I am an Amazon Prime member” (67%), an easy and convenient purchase process (58%), a broad selection (49%), and an easy returns process (43%). Best pricing came in sixth (42%).
Aldi earlier this year released its first-ever Price Leadership Report, confirming the limited-assortment grocer has the “lowest prices of any national grocery store.” The analysis conducted by Ernst & Young Quantitative Economics and Statistics Group (QUEST) found Aldi saves shoppers up to 36% on an average household’s shopping list.
The report likewise highlighted other factors driving Aldi’s appeal, including a survey showing consumers feel the grocer’s selection outranks the competition by two-to-one, and 76% believe Aldi’s brands are just as good as pricier national brands.
Walmart and Costco are also seen as gaining a benefit as perceived low-cost leaders at retail.
Aldi, Walmart, Costco, Amazon All Fighting for Price-Conscious Consumers
A 2023 survey from Mercatus, commissioned by consultancy Brick Meets Click, found 80% of shoppers choose to shop at a hard discounter like Aldi because of its low prices — compared to 72% who said the same about a big-box store like Walmart or Costco. Only 42% choose to shop at a traditional grocery store because of its low prices.
One advantage for traditional grocers is often being physically closer to consumers. Of the respondents, 77% chose to shop a regional grocer because of convenience, versus 64% for mass and 56% for hard discount.
The survey also found that, although Walmart and Aldi were found to have lower prices than regional grocers on an average, savvy shoppers believe they can save more at regional grocers by shopping weekly deals and waiting for sales.
Among deal-seekers, Mercatus’ survey found 41% go to traditional grocery stores to take advantage of the extra ways to save money, versus only 23% going to hard discounters and 29% to big-box stores. The report suggested regional chains could likewise explore incentives to help save consumers money when shopping online.
“Regional grocers are well positioned to help their customers save time, and they can also offer customers additional ways to save money based on how they want to shop,” explained David Bishop, partner at Brick Meets Click. “Strategies like having lower prices compared to third-party marketplaces, price protecting ad items, offering digital coupons, and offering graduated fees based on pickup times are all ways grocers can help their customers save money when shopping online.”
Discussion Questions
Has being perceived as a low-cost leader become any more, or less, important for Amazon, Aldi, Walmart and Costco as digital reshapes retail?
What obvious and less-obvious advice would you have for regional chains on how to compete against larger low-cost leaders?
Poll
Loading …BrainTrust
Scott Benedict
Founder & CEO, Benedict Enterprises LLC
Neil Saunders
Managing Director, GlobalData
David Biernbaum
Founder & President, David Biernbaum & Associates LLC
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Low price-focused retailers are on the right side of the current consumer mood, and this position makes it easier to attract and retain customers. But what creates deep success and lasting loyalty is great value – which means sharp prices plus some other dimension. Aldi has low prices plus great-tasting food. Walmart has low prices plus convenience. A player like IKEA has low prices plus strong design and quality. Trader Joe’s has low prices plus innovative meal solutions. These combinations are where the magic happens.
Regional chains can leverage their local knowledge to offer unique products and services that reflect the community’s culture and preferences. By emphasizing locally sourced ingredients or collaborating with local artisans, they can create a distinctive shopping experience. Additionally, building strong relationships with the community through events or partnerships can foster customer loyalty and differentiate them from larger competitors.
The traditional advice is “DON’T” (compete on price) since you’ll likely lose the competition; as Neil pointed out, while prices should be “competitive” (generously defined) the emphasis should be elsewhere.
Yes — I believe that being perceived as a low-cost leader remains extremely important for the likes of Amazon, Aldi, Walmart, and Costco, even as digital reshapes retail. In times of inflation and economic uncertainty, consumers across income levels tighten their belts and lean hard on value. Low prices on quality essentials are anchors of trust. The digital channel may offer convenience and speed, but at its core, retail still serves a human need: value. For many shoppers, the ability to stretch a dollar is not a luxury—it’s a necessity. Retailers that maintain low-cost leadership while delivering consistent quality continue to hold a powerful competitive advantage.
For regional chains looking to compete against these giants, the path to success lies not in matching head-to-head on price, but in smart differentiation. They can lean into superior service — knowledgeable staff, local relationships, and customer support. They can optimize selection and local relevance — curated assortments tailored to community preferences. They can build strong private-label brands that offer value with unique positioning. And they can deliver an omnichannel experience that blends local convenience with digital ease. In short, regional chains survive and succeed when they play to strengths that prominent “low-cost leaders” find hard to replicate at scale.
The retail environment demands both value and relevance. Low price remains a foundational element, but it’s not enough on its own. Chains that combine accessible pricing with thoughtful assortment, differentiated service, and regional authenticity are best positioned to win — especially in a climate where shoppers are value-seeking, yet also expect convenience, familiarity, and community alignment.
The low-price leaders intentionally operate with lower gross margins but they make up for it with velocity (how fast products sell) and volume (how many they sell). Ultimately, the advantage lies not just in being the cheapest, but in successfully owning a non-price value factor(convenience, deals, etc.) that satisfies a specific, segmented consumer demand.
The most important lesson I learned in my years at Target, when we were competing with Walmart, a price war has no winners. Better for retailers to look for credible differentiation that resonates with customers. What are their strengths, what keeps customers engaged, rather than trying to out-discount their cheaper competitors, regardless of the name over the door. A retailer’s value proposition is more complicated (thank goodness) than just price. Small, regional retailers have access to local market intelligence and the opportunity for genuine customer interactions in their stores in a way big chains just can’t match. Great retailers not only understand this, know how to leverage their strengths to build meaningful connections with their customers.
There is nothing wrong with being perceived as a low-cost leader. However, if retailers are focused on low prices, keep in mind that customers who are enjoying the low prices and keep coming back may not be loyal to you, but to the price. As soon as a competitor announces a lower price, the customer may move on.
For the smaller retailers competing with the low-price retailers, the goal is to “out-service” them. The best case study I’ve used in my books and articles is Ace Hardware. A smaller Ace Hardware store may be directly next door to a big-box retailer that has 10 times the space, a much larger selection, and often a lower price. Their mantra is to be the “helpful hardware place,” out servicing these competitors with knowledge and helpful advice and service. Their prices are competitive, but not always the lowest. Plus, they have merchandise that big-box stores don’t.
Low price leader is in demand right now given persistent inflation. As these retailers create value customers to go along with low price, whether it is convenience, merchandising or availability, it will earn repeat business from consumers. The bottom line is consumers budget is fixed and it is about battling for share of wallet this season.
Low-cost leaders have one promise to fulfill, and that is delivering on providing shoppers a perceivably low or the actual lowest price in the market. The trade-off for that is inconvenience, less selection, often lower quality, and lower levels of customer service.
Local or community grocers don’t need to play this game, and probably shouldn’t. Instead, they must successfully compete on variety & selection, locally grown/made products, high levels of customer service and greater convenience.