By Leslie Albrecht
Walmart and Kroger both have strengths and weaknesses. Which is best for your grocery needs?
Hello and welcome to Financial Face-off, a MarketWatch column where we help you weigh your financial decisions. Our columnist will give her verdict. Let us know if you think she’s right in the comments. We want to hear from you. Please share your suggestions for future Financial Face-off columns by emailing our columnist at [email protected]
Shopping for groceries these days is more like a game of dodgeball, where shoppers try to avoid being bombarded by high prices.
What can shoppers do to reduce their grocery bills? One option is to shop around and try another store. So how does Walmart (WMT), the nation’s largest grocery retailer, compare to Kroger (KR), the nation’s largest supermarket chain?
why is it important
Inflation is driving up the prices of everything from plane tickets to electricity. The cost of groceries in particular has skyrocketed. In August, grocery store prices rose 13.5% from a year earlier; it was the fastest annual increase since 1979. I’ve seen half gallons of organic whole milk selling for about $8 at my neighborhood store.
Grocery bills can eat up a significant portion of a household’s monthly budget, and they affect people differently depending on their income level. The highest income households spend the most money per year on food (an average of $13,973 in 2021), but the lowest income households spend the largest share of their income on food – 30.6 % – compared to 7.6% for the highest households. -income households, according to the US Department of Agriculture.
The rising cost of food has taken its toll on the elderly. According to a recent study from the University of Michigan National Healthy Aging Survey.
It can be easy to overspend on food. “If you don’t watch your spending in this area, you could be eating your wealth,” personal finance writer Michelle Singletary wrote in a column on grocery budgets.
Walmart. This table explains why.
There’s no doubt about it, Walmart’s prices beat Kroger.
“You’ll have less choice at Walmart, but from a shopping cart perspective, if you’re willing to switch to store brands or other brands, you’re going to save money at Walmart,” said Phil Lempert, a food industry. analyst and creator of the SupermarketGuru blog.
Besides low prices, Walmart has the added advantage of being a big-box retailer. At some locations, it’s possible to buy new socks for your little one, a lounge chair, or an Xbox (MSFT) console while doing your weekly grocery shopping.
The one stop shop saves time and money, and with gas prices as high as they are, this should not be overlooked. “When the economy is tough, a factor like this is even more important,” said Jeff Campbell, a former Whole Foods Market executive who now writes about the grocery industry at The Grocery Store Guy.
Of course, Walmart’s retail breadth only helps if the store is close enough. “If you have to drive an hour or an hour and a half to get to Walmart, the savings won’t compare to what you’re paying for in time and gas,” Lempert said.
(Walmart and Kroger did not respond to requests for comment on this story.)
Is my verdict the best for you?
On the other hand, Walmart’s lowest prices come at a cost. Both Lempert and Campbell said Kroger provides superior customer service to Walmart. They also say Kroger is a clear winner for store vibe and shopping experience.
“The first thing you notice when you walk into a Kroger store compared to a Walmart store is the overall decor,” Campbell told MarketWatch. “It’s a nicer, cleaner store with better customer service overall, more employees available to answer questions.”
A Kroger store is more likely to have aesthetic benefits like softer lighting and hardwood floors (or a close approximation) in the wine section, Campbell said. “Walmart is very stripped down – really, ‘We need to do it as cheaply as possible so we can operate with the lowest margins.'”
(Walmart has a gross profit margin of 25.1% compared to 19.96% for Kroger.)
Kroger will generally have a wider array of brands to choose from, and its produce department will be more plentiful, according to Lempert, while Walmart’s produce section will likely have fewer choices. Kroger is also more likely to carry more organic products and items marketed as “all-natural,” Campbell said.
Kroger caters to a food-savvy shopper, but it’s not as high-end as a Wegman’s or Whole Foods, Campbell said. “They don’t want to be known as the most expensive place in town,” he said. “They want to be recognized for their quality as well as their reasonable prices.”
Kroger is aiming to merge with Albertsons, and the companies say that will mean lower prices for consumers – although some observers disagree.
Nonetheless, a merger between Kroger and Albertsons would give the combined stores more buying power, more manufacturing facilities and more store brands, making the new entity one of the nation’s leading consumer packaged goods companies. , said Lempert.
“That’s when the fight really starts between Walmart and Kroger-Albertsons, when they really have that kind of power behind them,” he said. “So you’re really going to see a price war.”
So stay tuned, because this face-off might require a rematch.
See also: 5 reasons NOT to shop at Aldi – and a big reason why you should
We want to hear from you. Let us know in the comments which option should win in this financial head-to-head. If you have ideas for future Financial Face-off columns, email me at [email protected]
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