Wal-Mart Stores Inc (NYSE:WMT) is managing a new price-comparison trial in at least 1,200 stores in the United States and squeezing packaged items suppliers in a proposal to fill a pricing gap with German-based grocery chain Aldi and other U.S. peers like Kroger Co.
Wal-Mart introduced the price test across 11 Southeastern and Midwest states such as Illinois, Florida and Iowa, concentrating on price war in the grocery business that makes 56% of the firm’s revenue, informed vendor sources with knowledge of the matter but didn’t wish to be recognized for fear of upsetting business associations with Wal-Mart.
The company’s tests are targeted at finding the right price mark across a range of offerings that will attract increased number of shoppers, and then adjusting rates as required. Spot checks on a basket of grocery items offered by competing Wal-Mart and Aldi stores in five Illinois and Iowa cities demonstrated Wal-Mart’s bid to reduce prices is by now taking hold. The retailer consistently offered reduced prices as compared to Aldi, a progress over recent analyst projections that Wal-Mart’s rates have been almost 20% higher than Aldi on numerous grocery staples.
The war at these outlets is intense, with both peers offering a dozen large eggs for just under a dollar. As per the update, the big box retailer held meetings in Bentonville with consumer and food products vendors, counting Procter & Gamble Co (NYSE:PG), Unilever plc (ADR)(NYSE:UL), Conagra Brands Inc (NYSE:CAG) and called for reducing the cost they levy by 15%.
Wal-Mart reported it anticipates suppliers to help the firm beat peers on head-to-head pricing 80% of the time. The wide-ranging discussions with suppliers, where Wal-Mart talked on other topics was even attended by Johnson & Johnson and Kraft Heinz Co, among others. The consumer goods firms did not respond to publisher requests seeking comment.
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