Falling prices: Dollar stores now cheaper than Walmart
Deflation, or low-end store wars?
The price of a shopping basket with 42 identical household, food, beverage and throwaway "consumable" items declined from October to January "at Dollar General, Famly Dollar and Wal-Mart locations in northern New Jersey," writes Charles Grom, New York-based retail analyst at Birmingham, Ala.-based Stern Agee.
At Family Dollar, Grom and his shopping team found the basket of items fell 3.4% in price compared to three months earlier, to $145.59. Dollar General cut prices 2.2%, Wal-Mart by 0.7%. The dollar stores cut food and beverage and household products the most; Walmart was relatively cheaper for paper products and other "consumables."
Both Family Dollar and Dollar General are now, on average, cheaper than Walmart -- a reversal from May 2013, when "Walmart was the clear pricing leader," with savings of nearly a nickel per dollar, Grom reports. By January, Family Dollar shoppers were saving more than a nickel for every $2 spent at Walmart, and Dollar General was slightly cheaper than the big-store chain. In short: "Walmart has conceded the 'price leader' crown to Family Dollar."
At chain drugstores, by contrast, prices are a lot higher: A basket of 33 common goods at both CVS and Walgreens priced more than 30% above Wal-Mart equivalents.
Grom stopped short of blaming deflation or an economic slowdown for low-end consumers: In a report to investors he said the dollar stores are slicing prices for their own competitive reasons.