Editors' pick: Originally published Feb. 27.
At roughly 1,200 stores in 11 Midwest and Southeastern states, Walmart launched a new price-comparison test to help the company find the right price point on groceries. The test will allow Walmart to reduce its prices for consumers and better compete with rivals like discount food retailer ALDI and food and drug retailer Kroger (KR - Get Report) , according to a report from Reuters.
Walmart also held meetings last week with food and consumer products vendors, at its corporate headquarters in Bentonville, Arkansas, to convince them to reduce the price it pays for goods by 15%. Vendors including Procter & Gamble (PG - Get Report) , Unilever ADR (UL) and Conagra Brands (CAG - Get Report) were all present at the meetings, Reuters' sources said.
For competitive reasons, Walmart spokesman Lorenzo Lopez declined to go into specifics but said the retailer has been working on new price investment initiatives for "more than a year now."
"We're always working to deliver lower prices to our customers," Lopez told TheStreet.
Walmart, which used to dominate the low-price retail space, is slowly being encroached upon by new discount grocers like Aldi. To compare, a two-liter bottle of soda at an Aldi store costs $1.58 while a bottle at any Walmart store costs $1.56. A carton of 12 eggs at Aldi costs between 58 cents and 79 cents, versus Walmart where they cost between 78 cents and $1.08, according to research conducted by Reuters.
"Walmart is constantly adjusting its pricing in response to -- and in advance of -- competition," said John Zolidis, director of equity research at Buckingham Research Group, explaining that it is just a part of its business model.
"Lower prices, pressure vendors, try to drive sales, achieve incremental scale, repeat," Zolidis said.
Meanwhile, according to Deutsche Bank's own price comparison study, Aldi is "the price leader" over Walmart.
"Specifically, our Walmart basket was 13.5% more expensive on average," Deutsche analysts said in a recent research note. "Said another way, Walmart's average basket of $112.76 was $13.39 more expensive than Aldi's."
Deutsche said Aldi beat Walmart's low prices in both the household and food categories.
Walmart started slashing prices early in 2016 in areas such as food and other household products as part of a multi-year, billion dollar plus investment in lower prices.