The war is over. Wal-Mart won. Odd how one person can print a report basically repeating existing news and the stock prices of grocers plunge for one day. News flash: There are stores double couponing, promoting private label, and using fuel perks programs. Citi has to come up with some reason to “lower their guidance.” Next month they will make up some positive news to raise their “guidance.” But most likely there will be no major changes in supermarket operations.

Wal-Mart and Aldi are gaining share because their prices are lower and the economy is weakening. Other grocers can try to lower prices but it’s unlikely that they can lower them enough to make Wal-Mart and Aldi shoppers reconsider their loyalties.

David is totally right. What a bunch of clap-trap. And, Wal-Mart at 40% private label in three years? Let’s see, they’re at less than half that now, and doing well. This would be too big a change, and too soon. I think Citigroup is smoking some bad weed.

Competitiveness based on prices has been a factor for many months, as grocers reacted to the deepening economic slump. In a reaction to the slump, retailers have been pushing their private label products, pressuring manufacturers for lower prices and offering a variety of consumer promotions. For some retailers this is business as usual. For others it might mark a change, but it will not change the fundamental way they do business.

As economic cycles progress, nimble retailers respond by saying/advertising what consumers want to hear. Today it is prices. During better economic times it could be customer service. All grocers are not going to adopt an EDLP strategy as a result of this recession.

Congratulations to Wall Street–late again on the uptake. I guess this calls for another round of bonuses.

For those eagle-eye analysts who sit around and read charts all day or depend on quarterly meetings with CEOs to make their judgments, allow me to state unequivocally that grocery retailing is a hotbed of competition. Big surprise!

Waiting for someone to term the situation a “price war” is a little like waiting for someone to call a recession. And you can’t look at an entire industry and say it is in a price war. You have to look at the actions of retailers in individual marketing areas.

Yes, it’s cutthroat competitive. But no one wants a price war. That’s an act of desperation in which there are no winners.

Citgroup predicts grocery price war! Thanks for the glimpse at the obvious….

I agree with the earlier comments…Is it really news that there is/could be a grocery price war? I think what’s being missed so far in this article and the discussion is how these retailers can compete more effectively without the need to severely discount and compress margins–rather than appealing to what shoppers REALLY want, need, and will pay for. Deeper consumer insights represent the holy grail, not only for the grocery chains, but for their CPG and financial services/card processing partners as well.

Retailers that outsource loyalty programs to financial services partners and monetize shopper-specific purchase histories, and acquire additional insightful customer data from the card companies, stand to operate more efficiently and with a greater competitive edge.

Maybe these analysts should read their retail supermarket history books.

What is termed a price war, happened on a national scale in the early 1970s It was identified by the battle cry: WEEEEEOOOOO!!

That ended with the Great A&P losing millions.

Back then, inflation was soaring, and A&P gambled that customers would switch back to them, based on price alone.

Fast forward to the present. The landscape has definitely changed with more industry consolidation, Walmart, Aldi, drug stores, and dollar stores in the mix. Perks and sharp pricing are in vogue.

The price war bugles have been silenced. It’s all about remaining competitive and wrangling from manufacturers whatever deals supermarkets and others can bargain for, and passing the savings onto the customer.

If all of our analysts are correct, then what’s the point of staying in the grocery business if you all believe Walmart has already won?! Even you brilliant folks have fallen into the trap of the perceived low price holy grail everyone thinks they are.

I have been competing and beating Walmart on the perimeter for over 6 years, and I stopped worrying about how much they get on a 12 pack of Coke. We can beat the big boys with an aggressive perimeter strategy and still make a good profit but if everyone drinks the same Kool-Aid, and believes we’ve already lost, then shame on all of you analysts who believe in that philosophy.

Long live the creative independents!!!

The price war continues, and it appears to be spreading on several fronts. The next assault will likely reflect retailers standing firm on pricing issues with major Brandowners, further increasing Private Label share. Delhaize announced that stores in Belgium were dropping all of a major CPG company’s products because of pricing issues and SKU selections. Storeowners say prices are too high, and believe they, not the CPGs, must control SKU selection on store shelves in these difficult times.

There is no easy solution for these fundamental issues.

Retailers must make the right strategic choices to provide more value to shoppers as all in the retail chain struggle for survival.

Modern price optimization programs have pretty much put the kibosh on the mindless, unproductive, knee-jerk discounting that some call “price wars.” To me, price wars always smacked of panic, poor planning, and seat-of-the pants execution. Over the years I’ve been in the planning rooms for four independent ad groups and six chains when this topic was discussed, and emotion rather than smart marketing always ruled the day. But grocers don’t have to do that today due to their far superior knowledge of their own mix, and their more detailed competitive knowledge.

Citigroup does seem a bit late on the uptake–and it may be ascribing excess importance to the private label scenario at Walmart. However, it makes sense to me that the Great Wal would take steps to somewhat increase its store brand share. Margin sweetening and price competitiveness would naturally follow. Its success with Old Roy dog food among other products suggests potential to make some PL brands into national top sellers. Across the industry, CPG promotional activity is apparently up. But this is partly due to the maintenance of list prices that were elevated due to last year’s oil and commodity price scare. The present norm appears to be “list high and deal back,” so both brands and retailers can claim to be holding the line on prices. Against that backdrop, double couponing looks like a shopper-friendly tactic–and one that lets supermarket chains look competitive with Walmart, at least on some visible items. This is pretty familiar stuff to hardened denizens of the grocery wars, right? So my challenge to the experts at Citigroup is… Read more »

Where is Citigroup shopping?

Food prices are very high. Hamburgers for $5 per pound, tiny boxes of cereal for $4, milk for $3.75–where will it end? The hot topic of conversation among consumers IN the store is how much it costs to take the food OUT of the store. Perhaps Citigroup’s thoughts were a prediction, not a current report….

I agree with the commentators above. This war is over and Walmart won.

This information is right on target and also–Great News–For 1990.