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Wal-Mart in no-holds-barred price fight with Cub Foods

Posted by: John Ewoldt under Supermarkets Updated: March 28, 2012 - 1:24 PM

 

There's an unwritten rule in advertising that you don't take on your competition directly. Conventional wisdom says, "Why give a competitor free advertising by mentioning them?" But in the case of Wal-Mart v. Cub Foods, Wal-Mart isn't doing Cub any favors by mentioning them, said Glenn Karwoski, managing director at Martin Williams Advertising in Minneapolis.   

Wal-Mart's recent ads include a food basket of 39 items showing that the Monticello store charges 11 percent less than the Cub Foods in Monticello. That was the snapshot difference on March 12 when the price comparison was done. The items are identical brands and sizes, including Diet Mountain Dew, Purina One cat food, Kraft mayo, Tide pods, Bounty paper towels, Bertolli olive oil, Swanson chicken stock, and Jennie-O ground turkey. No unbranded produce or meat is included.

 

The price comparison is not surprising. I have yet to see a price comparison with a sampling of at least 35 items that finds a significantly different result. Last year, the non-profit Checkbook  found that Wal-Mart Supercenters were the cheapest, followed by SuperTarget (about 5 percent higher than Wal-Mart), then Cub Foods (about 13 percent higher than Wal-Mart) and Rainbow Foods (about 15 percent higher than Wal-Mart). Overall, Wal-Mart is the low price leader unless a person is shopping store brands. Aldi's prices are even lower than Wal-Mart's.

During the recession, more shoppers began to focus on price, but there are many reasons why we choose a supermarket besides price, said Luke Friedrich, spokesman at Cubs Foods.

 

Friedrich did not deny Wal-Mart's lower prices, but focused on Cub's other advantages. He adds that Cub has been focused on delivering locally-sourced products, a full-service deli and bakery, customized selection and customer service. That focus also includes community investments such as supporting Second Harvest Heartland.  

If you're wondering why a behemoth such as Wal-Mart is taking on Cub, consider that Cub Foods is still the dominant leader in the Twin Cities grocery market, said John Dean, a Twin Cities supermarket analyst. Cub's market share is still 29 percent compared to Wal-Mart's 11 percent, he said. Ironically, Wal-Mart is trying to fight its way up the food chain, taking on the top dog, Cub. "Wal-Mart is trying to buy market share," said Karwoski.

The Twin Cities is not the first market where Wal-Mart has run price comparisons. The first was in Charlotte, NC and more cities will be added, said spokeswoman Tara Raddohl.

Is price your main reason for choosing a supermarket?


 

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