Walmart and Target's prices pretty darn close, experts say

4/9/2013

The price war has begun.

Now that Target Canada is officially open for business, its pricing strategy is coming into focus.

And according to a recently released Kantar Retail study, the company’s prices “will stack up well against its Canadian competition,” including discount juggernaut Walmart.

Kantar added up the prices of 29 national brand items at Walmart and Target in the Toronto area. The list was made up entirely of grocery products and health and beauty goods.

“The retailers’ baskets were very competitive,” Robin Sherk, director of retail insights, said in a release. “We found that the price of Target Canada’s overall basket was within 25 cents of Walmart.” (See graph below)


Other studies have found similar results.

Credit Suisse analysts said late last month that they believe Target Canada is adopting its “U.S. price position as ‘close follower’ to Walmart” for grocery.

But they quickly added that Target does not seem to be interested in using grocery as a market differentiator, based on its “uninspiring and limited” offer.

The analysts wrote they were “surprised to see no support for key captive brands such as Archer Farms .”

Target is well known as a master marketer, but according to these experts, the company has not effectively promoted these new brand entrants.

It’s a shame, they said, since Archer Farms and Market Pantry (the other private label) could help differentiate the company.

But Target already has a major differentiator, in the form of an attractive discount program.

The Red Card offers customers a flat five per cent discount on just about everything in the store. With that discount applied, Kantar’s basket at Target would have been 4.8 per cent cheaper than Walmart’s.

“Looking ahead, we expect price competition between these two retailers to sharpen as go head-on for the same shopper,” said Sherk.

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