Charlotte grocery wars: How do prices compare?
05/16/2014 2:50 PM
05/19/2014 4:30 AM
Walk into a grocery store in the Charlotte region, and you’re likely to see evidence of the fierce competition for your dollars: Signs trumpeting lower prices, head-to-head cost comparisons with rivals and circulars boasting of how much you can save.
Charlotte’s grocery scene is getting more crowded, with Walmart, Harris Teeter and Publix opening new stores and fighting for their piece of the pie. Salisbury-based Food Lion, a subsidiary of Belgian grocery company Delhaize, is also battling back to reclaim its place after closing some stores and selling off others.
So, for all the sound and fury over groceries, who actually has the cheapest prices? To find out, the Observer comparison-shopped at four of the region’s most prominent grocers – Walmart, Harris Teeter, Food Lion and new entrant Publix – and compared a basket of 15 staple food items, such as milk and eggs.
Walmart was the cheapest, followed by Food Lion, Publix and Harris Teeter, in order of ascending price.
To get the most consistent comparison, the Observer used base prices, not sales, weekly specials and coupons, which frequently change.
Publix had prices higher than Harris Teeter on five items, lower prices on seven and identical prices on three. In total, Harris Teeter ended up being about 2 percent more expensive than Publix.
Both Harris Teeter and Publix were significantly more expensive than Walmart: The low-price retailer charged 22 percent less than Harris Teeter and 20 percent less than Publix.
Food Lion was in the middle, with prices 11 percent lower than Harris Teeter but 14 percent higher than Walmart.
Publix, Harris Teeter and Food Lion all pointed out that their sales and various promotional offers can substantially lower prices on their goods.
Kimberly Reynolds, a Publix spokeswoman, said the company will often have sales with lower prices than Walmart. But she said they compete on more than price.
“We strive to provide our customers value, which in addition to savings is making the entire store experience more of a pleasure for our customers,” with services such as carrying out their groceries, Reynolds said.
Harris Teeter spokeswoman Catherine Becker said the retailer’s recent push to lower prices on thousands of items is intended to more competitively price the grocer’s goods. But she said Harris Teeter also focuses on “delivering excellent customer service and outstanding products in clean, modern stores.”
Food Lion spokeswoman Christy Phillips-Brown said the company’s data shows nearly all of its customers use loyalty cards, which can provide additional savings.
And at Walmart, “we’re always watching our competition to try to stay a step ahead,” said spokeswoman Molly Blakeman.
A changing market
Charlotte’s grocery market is shifting, with new competitors marching in and familiar names changing or moving out.
Mega-grocer the Kroger Co. acquired hometown supermarket Harris Teeter in January. Whole Foods is adding two more stores, and Florida-based Publix is opening 14 area supermarkets, while Walmart has continued to push in with more supercenters and its smaller Neighborhood Market grocery stores.
At the same time, Bi-Lo and Lowes Foods have pulled back, selling most of their local stores and re-focusing on markets outside Charlotte.
According to data from Chain Store Guide, which tracks retail sales, Walmart is the biggest grocery retailer in the 10-county Charlotte region, with 22.4 percent of the grocery market. If you add in Walmart-owned Sam’s Club, the company’s market share climbs to 28.7 percent.
Harris Teeter is No. 2, with 20.4 percent, and Food Lion is No. 3, with 18.7 percent. Publix is a distant No. 13, with 1.3 percent of the market, but it had only three stores open at the time Chain Store Guide collected its data. With that number set to rise significantly in the coming years, Publix’s share is sure to grow.
And Publix’s sales-per-store, as measured by Chain Store Guide, were 29 percent higher than Harris Teeter’s.
Harris Teeter said last month that it was lowering prices on thousands of items at its Charlotte-area stores. The items are tagged prominently in local stores, and bright green and orange signs outside Harris Teeter stores urge shoppers to check out the new prices. Associates have switched to wearing neon green shirts that advertise the low price push.
Harris Teeter said efficiencies it gained from being part of Cincinnati-based Kroger – a company with $100 billion in annual sales – have allowed it to lower prices, and that the move wasn’t spurred by competition.
Apparently, Publix didn’t get that memo: Walk into a local Publix store, and you’ll see two grocery carts on display, full of the same items. One cart is from Publix, the other from Harris Teeter. The result? Publix says the goods cost $21.69 less at its stores, a savings of 14 percent over the Harris Teeter items.
Wake Forest University marketing professor Roger Beahm said that while Harris Teeter and Publix tend to pursue higher-end shoppers rather than go head-to-head with low-price retailers such as Walmart, they can still lure customers away from each other through price-cutting.
“Even within that segmentation, price is always important to the consumer,” Beahm said.
Meanwhile, analysts said Food Lion finds itself in a tough position. The company is neither the low-price leader it once was, nor positioned to compete with Publix and Harris Teeter.
“I see them more as a lost child,” said supermarket analyst Phil Lempert.
“They’re going to have to find another way to differentiate themselves,” Beahm said. “The low end is a very hard place to win.”
Food Lion unveiled a new logo last week, a broader assortment of popular items such as Greek yogurt, and a new customer service-focused training regimen for its 63,000 workers, as it seeks to lure shoppers back.
But while grocers battle each other for customers, the bigger competitor is often Walmart and similar supercenters.
Walmart has targeted both Food Lion and Harris Teeter directly with price comparison ads – a tactic Food Lion also used against Walmart to claim it actually has lower prices.
But Lempert said price, while important, isn’t the final word for every customer. If it were, Walmart would have won the war years ago.
“Every person in America’s not buying their food from Walmart,” Lempert said. “They’re not willing to give up everything else,” such as higher levels of customer service.
Competition, Lempert said, makes everyone step up their game.
“The good news is, with all this happening, it’s the consumer who wins,” he said.
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