Is A Grocery Price War Brewing?

As the grocery industry struggles to find their next act by adding grocerants, dietitians, clothing boutiques and other services an new report from Profitero may be a pre-cursor to what comes next: a price war.

In Price Wars: Grocery, Household & Beauty, Profitero analyzed pricing for 21,000 products in grocery, beauty and household supplies, finding only a 1.8% average difference between Walmart’s and Amazon’s prices for grocery. Target and Jet.com were both found to be, on average, about 6% higher in grocery than Amazon. 

Are we about to see a shift back to retailers focused on price? And at what cost to building a relationship with shoppers? Here’s what else they found. 

• Walmart is getting aggressive with price matching. The retailer matched Amazon prices on 53% of all CPG products studied, and 67% in grocery.
• The Amazon Prime Pantry program is paying off, helping create price separation from the competition. Prices on products listed in the Prime Pantry program average about 11% less than those found at other retailers.
• Jet.com is now nipping at Amazon’s heels in the beauty category with a price gap of just 1.4% between the two. Walmart beauty prices averaged about 5% more, while Target was almost 7% higher.
• Specialty retailers continue to lose ground in the battle for price supremacy. Online beauty prices at Walgreens.com and CVS.com averaged about 30% higher than Amazon. 

“Amazon still reigns as the low-price leader online, but it’s evident that Walmart is making grocery a key battleground for challenging that leadership,” said Keith Anderson, SVP of Strategy & Insights at Profitero. “Our latest study confirms that price gaps in online grocery are much narrower than what we found to be the case across other non-grocery categories. Walmart is clearly positioning to win shopper loyalty through aggressive pricing on everyday household essentials.”