Wall Street Journal writer John Jannarone warns of the Walmart effect. The company’s CEO Mike Duke told The Wall Street Journal last week that he expects gross margins to become more stable, which means Walmart will continue to slash prices and put its competitors on the “defensive.”
Jannarone made grocery stores an example. A study was done with shopping baskets at three different grocery stores (Walmart, Kroger and Safeway) full of the same 31 products. For those 31 products, prices have fallen 14.4 percent between January and September at Kroger, and Safeway’s prices dropped 9.7 percent during that same time period. Meanwhile,
Walmart’s prices declined only 2.6 percent.
With those decreases intact, Walmart was still the cheapest store for all 31 products, with an end total of $92.77. Kroger’s and Safeway’s totals were $109.98 and $113.03, respectively.