Walmart V. Harris Teeter in Carolina

Discussion
Mar 06, 2012

I have to admit being a bit flummoxed when I received a call from a friend in North Carolina telling me that Walmart was running ads comparing its prices to Harris Teeter in the Tar Heel State. Hearing the news, my first thought was whether there was anyone in North Carolina who doesn’t already know that Walmart has lower prices day-in and day-out on comparable items than its upscale grocery competitor.

So, it turns out that Walmart is planning to run similar ads in markets around the country in an attempt to pick off customers from competitive chains. The campaign, which is getting its start in the Charlotte market, includes television, radio and online messaging.

Tara Raddohl, a spokesperson at Walmart, told WFAE that the company chose to start in Charlotte, "Because we think it’s a market where some customers would be surprised to learn how much they can save by shopping at Walmart compared to other chains in that area."

Ms. Raddohl, told the The Charlotte Observer, that the campaign was tactical in nature. "We do have some intent to utilize the same campaign in some local markets, but not at a national level."

For its part, Harris Teeter doesn’t seem as though it intends to take Walmart’s bait and engage in a back-and-forth with its much larger competitor.

Jared Hensen, a former Walmart marketing exec and current UNC Charlotte marketing professor, told WFAE that Harris Teeter needs to "keep focusing on the quality they’re offering. The customer service, the cleanliness of its stores, the relationships in the community."

According to the Observer, Walmart (including Sam’s Clubs) currently is the grocery share leader in Charlotte with a 26.2 percent of the market, followed by Harris Teeter at 22 percent and Food Lion with 19.2 percent.

Discussion Questions: What do you think of Walmart’s price comparison campaign in the Charlotte market? How do you think Harris Teeter should respond?

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24 Comments on "Walmart V. Harris Teeter in Carolina"


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David Livingston
Guest
10 years 2 months ago

Walmart is going after chains with larger market shares that can’t possibly compete on price. Sure everyone knows Walmart is cheaper. Walmart is just trying to educate the consumer that doesn’t realize just how much cheaper they are. Walmart’s market share of 26% is too low. They would like to be at 35% or more. If Harris Teeter is 22%, that is just too high, and Walmart needs to give them a haircut.

About the only thing Harris Teeter can do is respond with the standard buzz words and press releases touting being locally operated, quality, and customer service. Anyone can sell groceries. Harris Teeter needs to sell the shopping experience.

John Boccuzzi, Jr.
Guest
John Boccuzzi, Jr.
10 years 2 months ago
Jared Hensen hit the nail on the head. Harris Teeter needs to “keep focusing on the quality they’re offering. The customer service, the cleanliness of its stores, the relationships in the community.” You will not beat Walmart at the price game nor can you outspend them in media. I had the pleasure of working with Harris-Teeter last year on a program which gave me the opportunity to visit over a dozen stores, speak with associates and even some customers. The in-store experience at Harris-Teeter blows Walmart away and Walmart knows this. If Harris-Teeter were to fall into the trap of a price war with Walmart they would have to reduce staff and lower wages (jeopardize customer service and experience), move into less desirable real-estate (location, location, location), dramatically cut back on in-store experience and quality (what customers have grown to expect), and decrease local involvement (alienate stores from the community). Not a suggested path. The best move for Harris-Teeter is to continue to do what they do and in fact do more of it. This… Read more »
Max Goldberg
Guest
10 years 2 months ago

Walmart had always competed on price, why should this be any different? Harris Teeter should not take the bait. Instead they should emphasize the value they provide their customers, from quality of meat and produce to customer service. Walmart can stand for price. Harris Teeter should stand for value.

Gordon Arnold
Guest
10 years 2 months ago

The simplest response to the Walmart campaign would be an invitation to the competitor’s store for a final look before you buy. But this probably won’t work for long, if at all. Companies like JC Penney, Walmart, the dollar stores and others have no doubt that the economy is getting worse in spite of how aging market indicators seem to mislead. The economically burdened are the largest growing segment in the US economy and they continue to grow by the tens of thousands a day. This being the case, price wars will yield positive market share to the winner(s). The competitors of companies with this market approach will need an accurate understanding of who their customers are, measured against the present day social demographics of their store locations. With this information in place the necessary adjustments will be obvious.

Warren Thayer
Guest
10 years 2 months ago

Walmart is preaching to the choir (its own customers). Harris Teeter has sufficiently differentiated its offering, although it may be wise to focus a bit more attention on value/service/quality/selection. As others have said here, going against Walmart on price is foolish. I don’t expect Harris Teeter will lose much here.

Dr. Stephen Needel
Guest
10 years 2 months ago

As Mr. Hensen says, keep pushing its benefits — don’t try to compete with Walmart on price.

W. Frank Dell II, CMC
Guest
10 years 2 months ago

Walmart has lost its low price image with consumers. This is an attempt to re-establish their price image. After many quarters of comp store sales decline and the failure of win, place and show, Walmart is going back to its roots. The problem is the world has changed. Surviving retailers have their own target market, dollar stores are new competition, and gasoline costs $4.00+ a gallon. Telling consumers that Walmart is cheaper than an upscale, high-service retailer is not news. Nor will it drive the upscale consumer to Walmart.

Robert DiPietro
Guest
10 years 2 months ago

Walmart’s campaign doesn’t surprise me. They ran a similar one last year in the office supply category.

If Harris Teeter responds, they should focus on the experience they provide vs price.

Joel Rubinson
Guest
10 years 2 months ago

I wonder if there will be a reverse effect. I once tested a restage of an existing beverage that had 4% real juice and upped it to 10%. The package said, “now with 10% real juice.” The scores were LOWER! We figured it out; people didn’t know the product only had 4% real juice and thought they had REDUCED the juice level from 25% to 10%. Is it possible people think the price gap is bigger than it really is, and when they see HT is more competitive on price they will shop there MORE?

Andy Casey
Guest
Andy Casey
10 years 2 months ago

Driving price awareness for North Carolina customers will probably be harder on other local competitors like Food Lion and BI-LO than Harris Teeter, frankly. Of course, they must be competitive on price but like Publix shoppers in Florida, loyalty to Harris Teeter has much more to it than simply price.

James Tenser
Guest
10 years 2 months ago

Ah yes, the old “dueling receipts” ad ploy … We’ve seen this one before, although perhaps not from the Great Wal.

For the few budget-conscious shoppers who don’t already spend a share of their wallets with Walmart, these ads may be somewhat persuasive. Then again, few North Carolina residents would be surprised to learn that Harris Teeter is a little more expensive, on average.

Not to be dismissive, we should consider that Walmart has made news with this campaign while reinforcing its core message about low prices. It may have also got local residents thinking about why they enjoy the Harris Teeter shopping experience, and what that is worth to them.

Jack Pansegrau
Guest
Jack Pansegrau
10 years 2 months ago

My suggestion for Walmart to get the maximum value out of their campaign: instead of ‘investing $2B’ in price cuts, why not split the difference and invest half in faster checkout and shorter lines? I recall the days when the Walmart experience included a speedy checkout too. Price might get the shoppers in the store, but the ‘convenience’ of speedier checkouts and shorter lines would keep ’em coming.

Ed Rosenbaum
Guest
10 years 2 months ago

How can anyone be surprised to read Walmart is advertising lower prices than the competition? They will be effective picking off some off the very price conscious customers. However, Harris Teeter is a brand based on quality and cleanliness. Walmart will find it difficult to compete against that or their customer service.

Steve Montgomery
Guest
10 years 2 months ago

As many have pointed out, I doubt many people in the market didn’t already realize that Walmart is less expensive. True they may not have realized how much less, but Harris Teeter offers a different shopping experience than does Walmart. Might this have some impact — certainly, but there are those people who see themselves as Walmart shoppers and those that don’t. Unless Harris Teeter sees some significant impact, I expect that they will stay the course and differentiate themselves in the way they always have — the overall shopping experience.

Ed Dennis
Guest
Ed Dennis
10 years 2 months ago

Well this doesn’t represent much of a challenge for Walmart. Harris Teeter typically prices 2L Coca Cola and Pepsi products at $1.99 vs Walmart’s price of $1.27. At my consumption rate of 3 bottles a week, that represents a savings $2.16 on just one product.

Harris Teeter has never been considered cheap and has targeted the affluent shopper and the aspirational shopper. Having lived in Charlotte, I can assure you the aspirational shopper population there is huge. The question at hand is whether the economy is sour enough to force these educated aspirationals to swallow their pride and save the major bucks that Walmart offers.

If Harris Teeter takes the bait and responds to Walmart’s pricing challenge, it could be the death of Harris Teeter. Harris Teeter has built an organization with large overhead expense that cannot be reduced without changing its very core. It should be fun to watch!

Phil Lempert
Guest
Phil Lempert
10 years 2 months ago

Walmart’s new combination of this price campaign coupled with the Walmart Great for You initiative will be a tough one to beat in any market. Harris Teeter will need to pull out all the stops to fight this one!

Carol Spieckerman
Guest
Carol Spieckerman
10 years 2 months ago

One reality is being overlooked — Walmart sells a lot more than food and it can afford to use grocery as a loss leader. Walmart would be wise to cross-promote non-food items that Harris Teeter can’t touch. No doubt Walmart has already calculated the potential incremental sales in non-food items for every customer that decides to save a few bucks on groceries. Harris Teeter would be wise to promote its private brands. If Harris Teeter has loyal customers, no doubt most are loyal to HT brands in some categories. Competing on price with national brands will be a resource-intensive race to the bottom.

Lee Peterson
Guest
10 years 2 months ago

I just don’t think it’s a good idea to publish your competition’s name — ever. Free publicity is free publicity. A consumer may see one of those ads and go, “Harris Teeter’s prices are similar to Walmart’s?” and make a visit to check them out.

Also, it’s a little like the attack ads the politicians barrage us with — does that really work? I don’t think so. Don’t say you’re better, just BE better — customers will get it, give them some credit.

Craig Sundstrom
Guest
10 years 2 months ago

“…was (there) anyone in North Carolina who doesn’t already know that Walmart has lower prices … than its upscale grocery competitor?” George, I don’t think there’s anyone in the world who doesn’t know that (at least if they’ve heard of HT, and if they haven’t, they’d probably guess as much). How does HT respond? As I imagine Miss Manners would recommend to anyone responding to a self-promoting blowhard … with a gentle smile.

Kai Clarke
Guest
10 years 2 months ago

This is an answer looking for a question. It is already so obvious that Walmart is the price leader. Why are they wasting their marketing dollars on this comparison? It will be interesting to see what the result of their marketing dollars will create in incremental market share after the campaign is over, since that will give them some indication if this is worth it….

Phil Rubin
Guest
Phil Rubin
10 years 2 months ago

Walmart’s campaign is indicative of a better economy where customers who can afford it are trading price for experience. There’s little doubt that most if not all Harris Teeter customers have been in a Walmart at some point and it likewise takes little effort to see the difference.

Time (i.e., the value of it) and habit are squarely in favor of Harris Teeter and the best thing they can do is not get dragged into the retail death spiral of price competition, especially with WMT.

Todd Birchenough
Guest
Todd Birchenough
10 years 2 months ago

The question is not should Harris Teeter respond, it is how they should respond. The target for this type of circular advertisement is neither the loyal Harris Teeter shopper nor the loyal Walmart shopper, it is the 70% to 85% of the shoppers that change their primary grocery destination on a weekly basis. Harris Teeter should invest its energies into figuring out which of its shoppers a) fall into the middle of this distribution and b) use price to make that Harris Teeter versus non-Harris Teeter decision. They should then find a way to communicate to them directly about the price advantages Harris Teeter offers. Safeway is effectively doing this in a limited number of markets via email campaigns and other targeted digital promotions through Personalized Prices in their Just for U program. As more retailers get to this level of personalized promotions, general advertisements around generic price perceptions will become less effective.

George Nielsen
Guest
10 years 2 months ago

Retailers need to be good at everything, including price. On a direct price comparison, I think consumers expect a 5-10% difference between low cost operators and others who emphasis quality and service. When they see in print that the actual price differential is upwards of 20%, I believe it’s a shock and enough of an eye-opener for them to at least consider making a switch. Retailers need to continually acquire new customers in order to survive. Walmart is going to get new shoppers from this campaign.

Ken Dailey
Guest
Ken Dailey
10 years 2 months ago

Nobody has mentioned who else talks price in the Charlotte area. Matthews, NC. headquarters … seems there could be a subtle message there.

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