Many price-conscious shoppers have given up on the grocery store, and walked out on Walmart, in order to get better bargains at places like ALDI and Save-A-Lot. But a new study says you may not be saving as much money there as you might think.
According to Kantar Retail’s sixth annual “Opening Price Point Study”, the low-price leaders are actually Walmart and Dollar General, and the hard discounters ALDI and Save-A-Lot are trailing the pack.
But it all depends on what you buy, and how you shop.
Having the lowest “opening price points” doesn’t mean having the lowest prices on the very same items. It means having the lowest price in an entire category of products. So if you want to buy cereal, and don’t care what kind, or how big the box is, the store with the lowest opening price point will be the store that has the absolute cheapest box of cereal available.
It’s not the way many of us shop – but it’s very relevant to “shoppers on highly constrained budgets… looking for the lowest absolute shelf prices in select categories,” Kantar explains.
So the goal of Kantar’s annual study is “to mimic the budget-strapped shopper’s need to meet her minimum purchase requirements across categories.”
And according to what Kantar found, the budget-strapped shopper might be better off sticking to Walmart or Dollar General than trying to find lower prices somewhere else.
Kantar checked prices across 21 categories of edible, nonedible and health and beauty products at a half-dozen low-priced retailers – Walmart, Dollar General, Family Dollar, ALDI, Save-A-Lot and Stop & Shop (representative of a “typical grocery store”). Save-A-Lot is a recent addition to the annual study – stores like Target and Walgreens were phased out over the years, due to the fact that they were not particularly competitive in offering low price points.
For the first time in the five years it’s been included in Kantar’s study, Dollar General wasn’t the winner. Instead, it tied with Walmart, as Dollar General’s prices rose slightly, while Walmart’s declined. This, Kantar said, is troubling for Dollar General: “Unbeatable low prices have been a core pillar of its value proposition for years, but these results suggest that the retailer may be losing ground.”
But ALDI and Save-A-Lot may find themselves in an even more troubling position. The good news is, they’re both a great place to buy food – Save-A-Lot actually won the edible category, with ALDI close behind. The lowest priced cereal at Save-A-Lot, for example, was just 99 cents, while Walmart didn’t have anything to offer lower than $2.00.
But they were both blown away in the other categories. Save-A-Lot had the highest nonedible total – more than twice as high as Walmart. And ALDI had the highest health and beauty total – nearly three times as high as category leader Family Dollar. At ALDI’s five competitors, the cheapest shampoo was $1 or less, while the cheapest shampoo at ALDI was a whopping $3.84.
So you can save the most by shopping around – going to Save-A-Lot or ALDI for food, Walmart for nonedible groceries, and Family Dollar for health and beauty items. But the truly budget-strapped shopper is least likely to want to, or be able to, run all over town buying different things at different stores. So the real winner will be the store that offers one-stop-shopping, with the best opening price points across all categories.
That store may not exist here yet – but it might soon. The German discounter Lidl, which is similar to ALDI, is making plans to come to the U.S. within the next year or so. Like ALDI, it offers a limited selection of low-priced products. “With an established history of disruption when it enters a new market, Lidl is likely to undercut the pricing of its closest competitors,” Kantar predicts.
So look out, Dollar General and Walmart. “The 2017 results of this OPP study could look vastly different,” Kantar’s report concludes. “Stay tuned.”
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