SPECIAL REPORT Wal-Mart Pricing ReportRound XIX Battle Of The Titans In Phoenix, Arizona Wal-Mart’s trifecta — the Supercenter, Neighborhood Market and Marketside — rules the roost in Phoenix. BY JIM PREVOR ome believe that the future of American retailing well represented in the marketplace with its Fry’s division. can be glimpsed in Phoenix, AZ. Between its large Tesco, the behemoth from across the sea, also used Phoenix as senior citizen population and large Hispanic popula- a launching grounds for its Fresh & Easy small store concept. tion, one can argue that this is what retailing in In addition to these national chain concepts, we included in America will look like in not all that many years. our comparison a strong independent: Basha’s Supermarkets. SSo we traveled down to Phoenix for the 19th iteration of our What can we surmise from the outcome of our produce pric- Wal-Mart Pricing Study, seeking not just our usual quest — the ing competition among this array of retailers in Phoenix? low price champion in one city — but also seeking enlighten- Many things to be sure, but as a first order, this: If Phoenix ment as to what the future might bring for retailing all across is the future of American retailing, and if price for a cus- the country. tomer walking in off the street is the key variable, then One thing is certain: Phoenix is, in fact, a place where a bat- the future belongs to Wal-Mart. tle of the Titans is playing out. It is the only market in America Not only was the Wal-Mart Supercenter the low price leader where one has a representation of three separate Wal-Mart con- in Phoenix, but the Wal-Mart Neighborhood Market concept cepts — the Wal-Mart Supercenter, the Wal-Mart Neighborhood came in number two, and Wal-Mart’s Marketside concept came Market and the new, small-store Wal-Mart concept known as in third! A trifecta! It hardly seems possible. Marketside. It is true, however. Yet in being true, it also reveals some In addition, Safeway has an energetic division and Kroger is dynamics that illustrate the way competition is playing out, MAY 2009 • PRODUCE BUSINESS 43 Wal-Mart Supercenter vs 6 Chains Price Comparison — Phoenix, AZ Prices Available To The General Public Produce Item How Sold* Wal-Mart Wal-Mart % Over Neighborhood % Over Basha’s % Over Fresh & % Over Supercenter Marketside Wal-Mart Market Wal-Mart Wal-Mart Easy Wal-Mart Apples Fuji Per lb 1.47 1.77 20.41% 1.37 -6.80% 1.69 14.97% 1.33 -9.52% Apples Gala Per lb 1.00 1.67 67.00% 1.37 37.00% 1.69 69.00% 1.37 37.00% Apples Granny Smith Per lb 1.47 1.77 20.41% 1.37 -6.80% 1.69 14.97% 1.51 2.72% Apples Red Delicious Per lb 1.47 1.67 13.61% 1.37 -6.80% 1.69 14.97% 1.49 1.36% Artichokes Each 1.50 2.28 52.00% 1.50 0.00% 0.70 -53.33% 1.79 19.33% Avocado Each 0.33 0.50 51.52% 0.68 106.06% 1.25 278.79% 0.49 48.48% Bananas Per lb 0.67 0.58 -13.43% 0.45 -32.84% 0.69 2.99% 0.38 -43.28% Berries - Blackberries 6 oz 2.29 5.47 138.86% 2.98 30.13% 3.99 74.24% 2.98 30.13% Berries - Blueberry 6 oz 2.01 1.79 -10.95% 1.90 -5.47% 3.99 98.51% 2.98 48.26% Berries - Raspberries 6 oz 2.50 5.47 118.80% 2.50 0.00% 3.99 59.60% 3.88 55.20% Berries - Strawberries Per lb 1.25 4.28 242.40% 2.50 100.00% 3.99 219.20% 2.98 138.40% Cabbage - Green Per lb 0.68 0.56 -17.65% 0.64 -5.88% 0.69 1.47% 0.52 -23.53% Cauliflower Per lb 1.21 0.92 -23.97% 1.16 -4.13% 1.49 23.14% 1.24 2.48% Carrots - Table 2lb/bag 3.36 2.98 -11.31% 2.88 -14.29% 1.29 -61.61% 1.35 -59.82% Carrots - Mini Organic 2lb/bag 1.68 2.98 77.38% 1.88 11.90% 1.99 18.45% 1.97 17.26% Cantaloupes Each 0.78 1.50 92.31% 2.00 156.41% 0.99 26.92% 1.97 152.56% Celery Bunch 1.38 0.98 -28.99% 1.32 -4.35% 0.99 -28.26% 1.22 -11.59% Cucumbers Each 0.25 0.88 252.00% 0.38 52.00% 0.99 296.00% 0.98 292.00% Cucumbers Hothouse Each 1.50 1.89 26.00% 1.50 0.00% 1.69 12.67% 2.28 52.00% Garlic - whole Per lb 2.68 2.77 3.36% 2.48 -7.46% 2.99 11.57% 5.51 105.60% Grapefruit Each 0.68 0.50 -26.47% 1.14 67.65% 0.99 45.59% 0.78 14.71% Grapes - Red Seedless Bunch 1.78 1.00 -43.82% 1.78 0.00% 2.99 67.98% 2.98 67.42% Grapes - White Seedless Bunch 1.78 1.00 -43.82% 1.78 0.00% 2.99 67.98% 2.98 67.42% Lemons Each 0.33 0.58 75.76% 0.33 0.00% 0.79 139.39% 0.79 139.39% Lettuce - Green Leaf Each 1.58 1.46 -7.59% 1.44 -8.86% 1.49 -5.70% 1.39 -12.03% Lettuce - Iceberg Each 1.28 1.18 -7.81% 1.34 4.69% 1.29 0.78% 0.98 -23.44% Mangos Each 0.98 1.38 40.82% 1.38 40.82% 1.59 62.24% 0.98 0.00% Mushrooms - Baby Bella 8 oz 2.48 2.48 0.00% 2.48 0.00% 2.65 6.85% 3.32 33.87% Mushrooms - White 8 oz 1.44 2.48 72.22% 1.50 4.17% 1.99 38.19% 1.82 26.39% Onions - Red Per lb 0.98 1.18 20.41% 0.88 -10.20% 1.29 31.63% 1.16 18.37% Onions - White Per lb 0.98 0.98 0.00% 1.28 30.61% 1.29 31.63% 1.13 15.31% Pears - Anjou Per lb 1.00 1.58 58.00% 1.00 0.00% 1.69 69.00% 1.55 55.00% Peppers - Green Bell Each 0.33 0.88 166.67% 0.38 15.15% 0.99 200.00% 0.69 109.09% Peppers - Serrano Per lb 2.68 1.18 -55.97% 2.59 -3.36% 1.99 -25.75% 2.50 -6.72% Pineapple Each 3.00 2.00 -33.33% 3.73 24.33% 3.99 33.00% 3.49 16.33% Potatoes - Red Per lb 1.18 0.68 -42.37% 0.98 -16.95% 1.29 9.32% 0.66 -44.07% Potatoes Sweet Per lb 0.98 1.38 40.82% 0.98 0.00% 1.49 52.04% 1.97 101.02% Salad - Caesar 10 oz 3.38 3.48 2.96% 2.88 -14.79% 2.99 -11.54% 2.81 -16.86% Salad - European 10 oz 3.26 2.78 -14.72% 2.68 -17.79% 2.99 -8.28% 4.83 48.16% Spinach - Organic Baby 5 oz 3.38 3.48 2.96% 3.00 -11.24% 3.99 18.05% 1.98 -41.42% Squash - Yellow Per lb 0.98 1.78 81.63% 1.42 44.90% 1.49 52.04% 4.25 333.67% Squash - Zucchini Per lb 0.78 1.78 128.21% 1.00 28.21% 1.49 91.03% 1.44 84.62% Tomatoes - Roma Per lb 0.50 0.89 78.00% 1.42 184.00% 1.49 198.00% 2.00 300.00% Tomatoes - Vine Per lb 1.50 2.98 98.67% 1.50 0.00% 2.99 99.33% 3.16 110.67% MARKET BASKET 66.72 81.80 22.60% 71.12 6.59% 86.69 29.93% 87.86 31.68% *Because some stores sell by the pound and some by the “each,” adjustments were made to ensure fair comparability. including strategic changes in the way Although Wal-Mart’s Neighborhood profitable, it has traditionally realized a retailers are coming to market. Market is still appealingly priced, coming return-on-capital lower than the Wal- Wal-Mart itself has made a major in at only 6.59 percent over pricing at Mart Supercenter. With higher prices, it strategic shift. In past iterations of our the Wal-Mart Supercenter, it is clearly is possible that profit margins will Wal-Mart Pricing Study when we have operating now on its own pricing agen- increase, return-on-capital will improve done cities that feature a Wal-Mart Super- da. This is a significant change. and we will see thousands of Wal-Mart center and a Wal-Mart Neighborhood It may lead to a faster expansion of Neighborhood markets roll out all across Market, the prices in both concepts have this concept, which has grown slowly. the country. been identical, allowing for the occasion- Wal-Mart executives have been hesitant Of course, there are risks for Wal-Mart al error or manager’s discretion at mar- to pour resources into the Neighborhood in allowing higher price points in the keting something down.