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Every day confusing prices

Two new pricing studies out this past week show Target and Walmart are so close to one another on a basket of goods that shoppers would have a hard time discerning which company is the low-price leader.

That’s a good thing for Target, but not so much for Walmart where the company is intent on convincing shoppers it has the lowest prices. Sometimes it does and sometimes it doesn’t, as researchers at Credit Suisse and Customer Growth Partners discovered. Credit Suisse look at a basket of 60 items in the Chicago and Dallas/Fort Worth markets and found Walmart 4.2% lower than Target compared with 3.9% the prior month. The Customer Growth Partners study found Target was lower than Walmart by 0.6% when it surveyed stores in Connecticut, Florida, Indiana and New York compared to a 0.7% gap the prior month.

“The 2011 data represent the first time Target has achieved nominal price parity versus Walmart since Customer Growth Partners  started its price checks in 2006,” according to the firm’s president Craig Johnson.

The basket of items examined included such categories as grocery, household chemical, paper product, personal care, HBA and commonly purchased general merchandise items. In the case of Credit Suisse, the basket is more narrowly focused on the food, household and HBA categories but comparisons are conducted across a broader spectrum of competitors. For example, in Chicago the firm looked at prices at Dominick’s, Jewel, Food-4-Less, Walgreen, CVS, Target and a Walmart discount store. In Dallas-Ft. Worth, surveyed retailers included Tom Thumb, Albertson’s, Kroger, Walgreen, CVS, Target and a Walmart discount store. In both markets the surveyed stores are located within a five mile radius.

“Our monthly pricing survey in Dallas and Chicago showed that most retailers, including Walmart, raised prices in February as they looked to pass along rising input costs. We believe the industry’s ability to successfully pass on upcoming inflation depends on what Walmart decides to do,” according the firm. “The 1.2% sequential increase in Walmart’s basket price observed in February suggests that the company is rationally passing through cost increases. Most other retailers in our survey raised prices even more and their relative price gap versus Walmart increased, but only modestly.”

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