{"id":526051,"date":"2010-04-13T12:03:08","date_gmt":"2010-04-13T16:03:08","guid":{"rendered":"http:\/\/www.businessinsider.com\/wait-maybe-retail-deflation-isnt-so-clear-2010-4"},"modified":"2010-04-13T12:03:08","modified_gmt":"2010-04-13T16:03:08","slug":"wait-maybe-retail-deflation-isnt-so-clear-wmt-wfmi","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/526051","title":{"rendered":"Wait! Maybe Retail Deflation Isn&#8217;t So Clear (WMT, WFMI)"},"content":{"rendered":"<p><img loading=\"lazy\" decoding=\"async\" class=\"float_right\" src=\"http:\/\/static.businessinsider.com\/image\/1b7a6c7915784a4a75492000-267-200\/wal-mart-walmart.jpg\" border=\"0\" alt=\"wal-mart walmart\" width=\"267\" height=\"200\" \/><\/p>\n<p>Charles Grom at JPMorgan has some excellent insights into food retail pricing. These are some interesting observations that you can check out.<\/p>\n<p>&#8212;&#8212;&#8212;&#8212;<\/p>\n<ul type=\"disc\">\n<li style=\"font-size: 9.5pt;\">\n<div style=\"text-align: justify; margin-bottom: 6pt; margin-right: 163pt; line-height: 12pt;\"><img border=\"0\" alt=\"&amp;#9679  \" vspace=\"2\" width=\"1\" height=\"1\" \/><span style=\"font-size: 9.5pt;\"><strong><span style=\"text-decoration: underline;\">Take 1<\/span><\/strong><\/span><span style=\"font-size: 9.5pt;\"><strong>: Whole Paycheck? Not Anymore.<\/strong><\/span><span style=\"font-size: 9.5pt;\"> Based on our checks, it appears that Whole Foods continues to stick to the course, with select price cuts throughout the store as opposed to a broad promotional strategy. While the company&rsquo;s prices are still higher than KR\/SWY\/HT by roughly 14%, on average, this is down from last December (~19%). Of note, we did observe two important trends in the store: (1) the company has launched a special &ldquo;One Day Deal,&rdquo; promotion that highlights new savings every Friday and (2) traffic has improved with customers purchasing both discretionary and non-discretionary products &ndash; see our FC note out 3\/30\/10, <\/span><span style=\"font-size: 9.5pt;\"><em>&ldquo;<\/em><\/span><span style=\"font-size: 9.5pt;\"><strong><em>Whole Foods: Trends Firming to the Upside, Overweight&rdquo;<\/em><\/strong><\/span><span style=\"font-size: 9.5pt;\"><strong> <\/strong><\/span><span style=\"font-size: 9.5pt;\">for additional color on Overweight-rated WFMI. <\/span><\/div>\n<\/li>\n<\/ul>\n<div style=\"text-align: justify; margin-left: 9pt; margin-bottom: 6pt; margin-right: 163pt; line-height: 12pt;\"><span style=\"font-size: 9.5pt;\">&nbsp;<\/span><\/div>\n<ul type=\"disc\">\n<li style=\"font-size: 9.5pt;\">\n<div style=\"text-align: justify; margin-bottom: 6pt; margin-right: 163pt; line-height: 12pt;\"><img border=\"0\" alt=\"&amp;#9679  \" vspace=\"2\" width=\"1\" height=\"1\" \/><span style=\"font-size: 9.5pt;\"><strong><span style=\"text-decoration: underline;\">Take 2<\/span><\/strong><\/span><span style=\"font-size: 9.5pt;\"><strong>: Wal-Mart&rsquo;s New Rollback Strategy Appears More Strategic<\/strong><\/span><span style=\"font-size: 9.5pt;\">: On April 1<\/span><span style=\"font-size: 9.5pt;\"><sup>st<\/sup><\/span><span style=\"font-size: 9.5pt;\">, Wal-Mart launched a new wave of price rollbacks across its entire chain to help solidify its price leadership position. During our field work, we observed <\/span><span style=\"font-size: 9.5pt;\"><strong>(1)<\/strong><\/span><span style=\"font-size: 9.5pt;\"> enhanced signage used to identify new price cuts (Rollbacks) and bring attention to already low prices (Unbelievable Buys, Save More), <\/span><span style=\"font-size: 9.5pt;\"><strong>(2)<\/strong><\/span><span style=\"font-size: 9.5pt;\"> the use of end caps to highlight new rollback merchandise, and <\/span><span style=\"font-size: 9.5pt;\"><strong>(3)<\/strong><\/span><span style=\"font-size: 9.5pt;\"> the return of Action Alley. <\/span><span style=\"font-size: 9.5pt;\"><span style=\"text-decoration: underline;\">However, in spite of all the visual signs of price investment throughout the store, the average price in our 31-item basket (entirely food\/consumables) actually increased 2.3% sequentially from February<\/span><\/span><span style=\"font-size: 9.5pt;\">. This increase comes on top of a 1.9% uptick from January to February. <\/span><span style=\"font-size: 9.5pt;\"><em>Importantly, we found it difficult to determine which price cuts in food\/consumables were incremental and which were a result of standard promotions the retailer typically puts in place.<\/em><\/span><span style=\"font-size: 9.5pt;\"> When it&rsquo;s all said and done, however, Wal-Mart is still priced ~12.0% lower than the traditional grocers, on average (vs. 15.6% lower in February). <\/span><\/div>\n<\/li>\n<\/ul>\n<div style=\"text-align: justify; margin-left: 9pt; margin-bottom: 6pt; margin-right: 163pt; line-height: 12pt;\"><span style=\"font-size: 9.5pt;\">&nbsp;<\/span><\/div>\n<ul type=\"disc\">\n<li style=\"font-size: 9.5pt;\">\n<div style=\"text-align: justify; margin-bottom: 6pt; margin-right: 163pt; line-height: 12pt;\"><img border=\"0\" alt=\"&amp;#9679  \" vspace=\"2\" width=\"1\" height=\"1\" \/><span style=\"font-size: 9.5pt;\"><strong><span style=\"text-decoration: underline;\">Take 3<\/span><\/strong><\/span><span style=\"font-size: 9.5pt;\">: <\/span><span style=\"font-size: 9.5pt;\"><strong>Kroger Slowly Pumps the Brakes:<\/strong><\/span><span style=\"font-size: 9.5pt;\"> In April, we saw ongoing signs that Kroger has begun to tap the brakes on its heavy price investment (as CEO David Dillon indicated on the company&rsquo;s 4Q call) and shifted its focus to more targeted promotions. For example, this was the first month in 2010 that the grocer hasn&rsquo;t run its 10 items for $10 promotion &#8211; instead opting to focus price cuts on Passover and Easter products. As a result, average prices at the grocer increased 1.4% in April, which follows a 2.9% increase from January to February. On observations, traffic looked relatively in-line with February levels, but the number of items in the basket was noticeably higher than in our previous visit. <\/span><\/div>\n<\/li>\n<\/ul>\n<p><a href=\"http:\/\/www.businessinsider.com\/wait-maybe-retail-deflation-isnt-so-clear-2010-4#comments\">Join the conversation about this story &#187;<\/a><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~r\/TheMoneyGame\/~4\/6BrQ--ZEXVA\" height=\"1\" width=\"1\"\/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Charles Grom at JPMorgan has some excellent insights into food retail pricing. These are some interesting observations that you can check out. &#8212;&#8212;&#8212;&#8212; Take 1: Whole Paycheck? Not Anymore. Based on our checks, it appears that Whole Foods continues to stick to the course, with select price cuts throughout the store as opposed to a [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-526051","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/526051","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=526051"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/526051\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=526051"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=526051"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=526051"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}