Telling it like it is

Questions about pricing and the competitive environment often arise when Target conducts quarterly conference calls or meets with analysts. It is a subject in which there tends to be keen interest within the financial community because of Walmart’s overriding emphasis on price as a competitive advantage and an assumption that other retailers, including Target, are at a competitive disadvantage. However, as Target chairman, president and CEO Gregg Steinhafel frequently points out, Target is very competitive with Walmart when it comes to price and has been going head-to-head with the company for decades.

Steinhafel is typically quite diplomatic in his response on the subject of pricing and Walmart, but Kroger chairman and CEO David Dillon was less so last week when the subject came up during the company’s first quarter conference call.

“Walmart has become publicly more aggressive in what they’re saying that they’re doing, and if you look at what’s happening in the stores and in the markets, just like we said the last two quarters, the marketing behavior, merchandising behavior Walmart is doing is a lot more consistent with a traditional grocery supermarket operation than it is consistent with what Walmart used to do,” Dillon said. “It is a lot more feature items, sometimes features are on a little longer than a week, but it is feature items. And when you operate that way, there are items that come down in price which get lots of publicity, but there are also items that go up in price that don't get much publicity. So we see the behavior as there is a lot of marketing noise around it, but we see the behavior as pretty much what happens in a lot of grocery.”