Will Walmart’s price push pull customers away from Aldi?
There aren’t many grocers who can go head-to-head with Walmart on groceries and come out ahead in the matchup. Aldi is one of the few and it appears Walmart management has decided to sharpen its price focus to put some separation between itself and its small box grocery competitor. Reuters reports that the world’s largest retailer has launched a price test covering 1,200 of its stores in states across the Midwest and Southeast.
The news service, which conducted market basket checks at stores in Illinois and Iowa, found Walmart had “consistently” lower prices than Aldi. This was a reversal from previous analyst findings that put Aldi’s prices about 20 percent lower than Walmart’s.
News of Walmart’s price test follows meetings the chain had with consumer packaged goods vendors last week at which the retailer demanded price concessions. Unnamed vendors told Reuters that Walmart expects them to help the chain beat rival prices “80 percent of the time.”
While price is central to Walmart’s branding, the retailer is also turning to technology to improve its service perception. Walmart has rolled out two new features on its mobile app that appeal to some of its most important customers.
The first allows pharmacy customers to refill prescriptions using mobile devices. Customers can now skip lines when picking up prescriptions at Walmart pharmacies. Pharmacy and over-the-counter remedy sales account for 10 percent of Walmart’s domestic revenue, according to CNBC.
“By developing and combining the best of our app with a service that our customers depend on daily, we’re driving change that makes living better easier,” said Paul Beahm, senior vice president, Walmart Health and Wellness Operations.
The second enhancement allows customers of its Money services to use the app to submit information for the transaction privately rather than filling out paperwork in stores. Here too, customers using the app can skip the line to complete their transactions. One in five customers, according to CNBC, conduct financial transactions while in the chain’s stores.
- Wal-Mart launches new front in U.S. price war, targets Aldi in grocery aisle – Reuters
- Walmart App Upgrades + New Store ‘Express Lanes’ = Faster, Easier Shopping – Walmart
- Wal-Mart’s latest technology play takes aim at both Target and Amazon – CNBC
DISCUSSION QUESTIONS: How do you expect Walmart’s price competitiveness and its mobile app enhancements to affect its business in the near term? Will price or service improvements be more important to Walmart achieving incremental sales gains over the next five years?