Amazon tops other U.S. online retailers on price by an average of 20% across 16 key product categories, but in grocery it’s Kroger — not Walmart — that stands as the No. 2 price competitor, a study by Profitero finds.
The e-commerce analytics firm’s “Price Wars: A Study of Price Competition” report, released Tuesday, compared the daily prices of 12,500 products across 20 retailers from July to September.
For grocery items, Kroger averaged 1.6% more expensive than Amazon on 156 exactly matched products, Profitero said. Next were Jet.com, a Walmart subsidiary, at 3.5% more expensive (133 matching products and Walmart at 6.2% more expensive (172 products), followed by Instacart grocery retailers at 10.7% more expensive (137 products) and Target at 11.6% more expensive (153 products). (See chart above.)
“No retailer studied beat Amazon on price in grocery during the period studied,” Boston-based Profitero said in the Price Wars report. “Interestingly, supermarket leader Kroger, and not Walmart, was the closest to Amazon’s pricing in grocery.”
Kroger is “getting aggressive in grocery,” Profitero observed in announcing its latest pricing study.
“In past studies, Jet.com was Amazon’s toughest rival when it came to grocery pricing, but Kroger has emerged as the clear No. 2 price leader in online grocery, trailing Amazon by 1.6%,” Profitero stated. “Among the retailers studied, Target.com offered the least competitive pricing for online grocery when compared to Amazon.”
In other supermarket product categories examined by Profitero, Target finished second to Amazon in pricing for pantry items, at an average of 6.6% more expensive on 121 exactly matched products. Following Target were Walmart at 8.5% more expensive (83 products), Walgreens at 32.3% more expensive (235 products) and Jet at 33% more expensive (121 products).
Walmart came in No. 2 to Amazon in household supplies, averaging a 3.5% higher price on 162 matched products. Next were Target at 4.5% more than Amazon (120 products), Jet at 5.9% more (131 products), Walgreens at 20.8% more (33 products) and CVS Pharmacy at 60.6% more (16 products).
In the growing pet supplies category, online retailer Chewy.com averaged 0.4% higher pricing than Amazon on 182 matched products, while Walmart was close behind at 1.3% more expensive on 177 items, according to Profitero. Those retailers were well ahead of No. 3 Target at 6.6% more expensive (152 products) and No. 4 Petco at 21.2% more expensive (176 products).
“While ‘online generalists’ like Amazon, Walmart, Jet and Target continue to compete aggressively with one another on price, category specialists appear to have entirely abandoned item-by-item price competition,” study author Keith Anderson, senior vice president of product strategy and insights at Profitero, said in a statement. “Instead, they are competing on value beyond price, offering memberships, personalized services, personalized promotions and private-label products consumers can’t find elsewhere. This is the recipe for how retailers — and even brands selling direct-to-consumer — can compete long term in this age of algorithmic-driven pricing.”
Across all 16 product categories, Walmart was second to Amazon with average pricing of 4.1% more expensive, followed by Target at 10.6% more than Amazon and Jet at 11.3% more than the e-tailer. The three categories with the highest prices indexed above Amazon by Walmart.com, Target.com or Jet.com were home furniture, home storage and pantry.
Still, Profitero noted, Amazon faces tough competition in many categories. For example, Walmart.com narrowly trailed Amazon in average pricing for baby (+0.2%), pet supplies (+1.3%), and toys and games (+1.7%). In addition, Chewy.com’s pricing in pet supplies was only 0.4% more than Amazon’s, and Jet.com had average pricing of just 0.6% more than Amazon in office supplies.
Drug chains, meanwhile, are leveraging their convenient locations despite much higher pricing than Amazon.
“Buffered by their vast network of local stores and prescription businesses, pharmacy retailers are also avoiding direct price competition on the same items. In vitamins and supplements, for example, CVS was 64.5% more expensive than Amazon and Walgreens 60.9% more expensive,” according to Profitero. Following Amazon on average price in vitamins and supplements were Walmart (+4.6%) and Target (+8.1%).
In other categories found at supermarkets, Target was 2.2% more expensive than Amazon in beauty care. Next were Walmart (+7.7% versus Amazon), Walgreens (+34.8%) and CVS (+52.3%). The difference was narrower in baby, with Walmart’s average pricing just 0.2% more expensive than Amazon’s and Target’s at 6.1% more expensive. Walgreens was next at 23.8% more expensive than Amazon in baby.
Other categories in Profitero’s 12-week price analysis included appliances, electronics, music CDs, office electronics and supplies, sports and outdoors, and tools and home improvement.
Source: Supermarket News