Take Kare of your Money: Supermarkets
MINNETONKA, Minn - Like a lot of Twin Cities' residents Stan Pohmer has been seeing the full page ads in his Sunday paper: Cub and Walmart in a tit for tat over grocery prices, each claiming to be lowest.
In one ad Walmart declares a nearly $13 savings compared to the same shopping trip at Cub. In another ad Cub claims a savings of more than $18.
"Actually it was almost expected," says Pohmer, a retail analyst based in Minnetonka.
Walmart is expanding big in the Twin Cities; three new Supercenters last year alone, with at least three more in the works.
Now the nation's largest seller of groceries has trained its sights on the largest seller of groceries in the Twin Cities: Cub.
Pohmer says it's a familiar Walmart strategy. "Don't go after the little guy, go after the big guy, and if you can build your case on that, then the perception is you've got the lowest prices around."
But is perception reality? We decided to run our own price check. On January 22nd, KARE visited a Cub and a Walmart within view of each other in Brooklyn Center. The Cub store is a neighborhood fixture, the Walmart brand new - built on the site of the old Brookdale Center Mall.
We purchased the same 35 items on a pre-selected list from across the various grocery departments at both stores, applying any store coupons made available to us at the stores. (For the complete item list.)
Walmart got off to a fast start in frozen foods. Walmart price for a Tombstone Pizza: $3.33. The same pizza at Cub: $5.99.
A loaf of Brownberry Widepan Wheat Bread: $2.98 at Walmart. $4.29 at Cub.
A box of Cheerios cereal: $2.84 at Walmart. $3.89 at Cub.
Cub's prices reflect what's known in the industry as "high/low," meaning higher prices on some products, but deep discounts during sales.
So with a coupon from the Sunday paper insert, Cub's price for the Kraft Miracle Whip on our shopping list was $2.49. At Walmart we paid $3.88.
Cub's sale price on Campbell's Chicken Noodle Soup was 88 cents. At Walmart: $1.25.
But in the end there were not enough sale items at Cub, to make up for Walmart's overall lower prices.
Final tab on our 35 items: Cub: $113.10. Walmart: $94.41. A savings at Walmart of more than $18.
"We're not surprised by it," said Dave Heber, the manager of the Brooklyn Center Walmart. Heber makes no apologies for the ad war with Cub that Walmart started.
"It's all about market share, we want our fair share and we've got to take on the best competitors," he said.
Walmart's pricing is less reliant on sales and coupons, a strategy known in the industry as "everyday low."
Yet, we wondered what might have happened had we done our shopping differently. What if we hadn't stuck to just the brand names on our shopping list, but searched instead for the absolute lowest price - applying, for instance, a Cub coupon for Kraft salad dressing when Wishbone had been on our list. In addition, what if we bought store brands, where available? Might the results be different?
Back to both stores we went, this time in search of the absolute lowest price on each can of beans or jug of milk on our list.
By using the Sunday paper cub coupon, we bagged the Kraft salad dressing for $1.49, 17 cents cheaper than the least expensive ranch dressing on Walmart's shelves, the Great Value store brand.
Cub's Shopper's Value brand potato chips were priced at $1.50. Walmart's Great Value store brand: $1.98
But elsewhere, Walmart regained its edge. It's Great Value premium orange juice: $2.78. Cub's Essential Everyday brand juice: $3.39.
Walmart's Great Value peaches: 98 cents. Cub's Essential Everyday peaches: $1.24,
Again 35 items -- lowest price we could find regardless of brand - and Walmart wins again, though by a closer margin. Cub: $81.48. Walmart: $71.85.
"We absolutely believe at Cub we can compete on price," said Cub spokesman Luke Friedrich when shown the results of our price comparison. Friedrich says Cub shoppers don't stick so much to a list like the one we used, but save money be stocking up when they see sales.
"They shop very heavily in our promoted items," Friedrich said. "Actually about half the products we sell in a typical grocery basket for our customer are going to be promoted items."
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