Walmart Launches Price War With Aldi, Demands Price Cuts From Suppliers

Image courtesy of Ben Schumin

Grocery sales comprise over half of Walmart’s receipts, so it makes sense that the mega-retailer wants to keep its prices competitive. In at least 1,200 of its stores, though, the chain is reportedly slashing prices in an effort to give customers a reason to shop at Walmart instead of discount grocer Aldi and other supermarkets.

Reuters learned from sources at companies that supply Walmart that the retailer has launched price comparison tests at 1,200 stores in 11 states. The chain’s reported goal with these tests is to find the right price for popular items that will attract more customers and beat competitors, but still earn a profit.

Reuters went out and spot-checked stores in Illinois and Iowa, two states that are part of the price test. In all of the stores, they used a basket of basic items like tomatoes, bananas, milk, peanut butter, eggs, and pasta, and checked the prices of the imaginary basket against Aldi.

Shopping for all store-brand items, the wire service found that the total was between 5.6% and 10.3% cheaper at Walmart than at Aldi.

The supplier sources told Reuters that Walmart had called in its biggest grocery product vendors — companies like ConAgra, Procter & Gamble, and Unilever — for meetings last week. Among other topics, Walmart “demanded” a 15% price cut from the suppliers.

The company explained that another change will be in logistics: It has asked that suppliers ship Walmart’s orders complete and on time, which would let it keep items in stock, avoid unneeded re-orders, and take in an additional $1 billion in sales, benefiting everyone.

Walmart has been saying for the last year that it’s “investing in price” without spelling out exactly what that means, and made a statement along those lines in response to a request from Reuters. Consumerist contacted Walmart to find out more about these price tests, and the company said pretty much the same thing.

“We continuously look for ways to deliver savings to our customers – it’s part of our DNA,” the communications department told us. “As we’ve said previously, we’re investing in price. But we’re not in a position to share our strategy for competitive reasons.”