Wal-Mart is comparing prices with good offered by Aldi and U.S. rivals like Kroger so it can close a pricing gap. Fred Katayama reports.
Get set for a fiercer food fight. Wal-Mart's determined to close a pricing gap with the discount grocery chain Aldi and rivals like Kroger. So, sources say, it's comparing prices in more than 1200 stores in the U.S. Groceries are key because it makes up more than half of Wal-Mart's revenue. Reuters has done some spot checks, and it appears Wal-Mart's move is already showing results. It consistently offered lower prices versus Aldi - some 8 percent on average for 15 staples. That's an improvement. Estimates by Wolfe Research in December showed Wal-Mart's prices were as much as 20 percent higher than Aldi's over the past few years. Wal-Mart controls just more than a fifth of the U.S. grocery market. But German chains like Aldi and Lidl upended the grocery market in the U.K. Lidl plans to enter the market this year. Telsey Advisory Group analyst Joe Feldman said, "Large companies like Wal-Mart, Kroger and dollar stores have a much better shot of being competitive on price. I worry more about regional guys like if you have a 50-store chain in the upper Midwest." Shares of Wal-Mart and Aldi fell at the start of trading.