(Wal-Mart, Target price comparisons article update with Target's first-quarter results.)NEW YORK ( TheStreet) -- "Save Money. Live Better." Wal-Mart ( WMT)has based its business off this iconic motto since 2007. Prior to the catch phrase Wal-Mart operated by the slogan, "Always low prices," for nearly 19 years. But starting in 2011, it appears the retail giant may have abandoned its business model of everyday low prices, further hampering its already pressured domestic sales. In the first three months of the year, Wal-Mart's prices on food, health and beauty products and other general merchandise were nearly identical, if not a bit pricier, than archrival Target ( TGT).
Two categories, in particular, where Wal-Mart remains a price leader are groceries and non-perishable home good like paper towels and light bulbs.
While Target has grown its P-Fresh assortment by leaps and bounds, Wal-Mart continues to dominate the sector. About half of all of Wal-Mart's merchandise falls under the groceries segment, while CGP estimates that 15% to 20% of Target's merchandise are groceries. According to the Kantar study, Wal-Mart was cheaper in edible grocery items by about 1% and has a 3.4% advantage over Target with non-grocery items. Kantar purchased a basket of 13 edible items, finding price differentiations like a tub of Land 'O Lake butter for $3.48 at Wal-Mart and $4.39 at Target. It is also worth noting, that five of the items Kantar studied in the category were on sale that week at Target, while just one item at Wal-Mart was a special. If these items were not on sale, Wal-Mart would have been cheaper by 6.2%. Food inflation has put pressure on all grocers, but Wal-Mart has been less willing to accept increases in general merchandise from suppliers or pass along these higher costs to shoppers, allowing to hold its title as the biggest seller of groceries in the U.S. In non-groceries, a package of GE Soft White Light Bulbs, 60 watts, sells for $1.88 at Wal-Mart and $2.29 at Target, while a four-pack of Duracell pre-charged AA batteries are $12.19 at Target and $11.37 at Wal-Mart. But during the first three months of the year, Wal-Mart was easily beat in the health and beauty segments, with both CGP and Kantar saying Target has a clear edge on price.
In January, Target had a 7.3% advantage over Wal-Mart, according to Kantar. But the research firm noted that this was partially because nearly 30% of the items studied in the category were on sale at Target, while only one was on sale at Wal-Mart. Still, even without these sales, Target would have been 5.5% cheaper.
It shouldn't come as a surprise then that Wal-Mart reported yet another decline in domestic same-store sales in it first quarter. This marks the eight consecutive quarter the discounter has posted a drop in U.S. same-store sales. During the quarter, comparable sales dropped 1.1%. While this is somewhat of an improvement over recent quarters, Wal-Mart continued to issue a cautious outlook due to higher prices of gasoline and food, which could hamper consumer spending. Wal-Mart has been struggling with its image among core shoppers since it removed thousands of items it deemed unprofitable from its shelves starting in 2009. While it is currently restocking some of this merchandise, the process is slow, and has left a sour taste among some customers. But an even bigger concern has been the perception among shoppers that Wal-Mart does not offer the same savings it always had. "We believe that the price leadership perception, in fact, is a greater issue for Wal-Mart than destocking the fifth or sixth brands in a particular category," Johnson says. In comparison, while Target's sales growth was slower than expected, at the very least sales actually grew during the first quarter. The company reported a 2.8% climb in sales to $15.6 billion, while comparable sales rose 2%. While Target has typically been considered a high-end discounter, amid the recession the company introduced several new initiatives that have helped to erase this perception. But it appears, at least, that Wal-Mart returned to its deep discount roots by the end of April. In CGP's most recent study, Wal-Mart reasserted its price leadership over Target, with its prices being about 3% cheaper before factoring in Target's Redcard. In April, Wal-Mart's prices were 2.8% lower than Target's, according to CGP, but including the Redcard, Target had a 2.3% favorable edge. Wal-Mart may be headed in the right direction, but the question is, will this result in a sales recovery in the second quarter? --Written by Jeanine Poggi in New York. >To contact the writer of this article, click here: Jeanine Poggi. >To follow the writer on Twitter, go to http://twitter.com/jpoggi. >To submit a news tip, send an email to: email@example.com.