Tuesday, May 26, 2015

Falling prices: Dollar stores now cheaper than Walmart

Deflation, or low-end store wars?

Falling prices: Dollar stores now cheaper than Walmart

The view inside a Family Dollar store. (Photo from glassdoor.com)
The view inside a Family Dollar store. (Photo from glassdoor.com)

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.

About this blog

PhillyDeals posts drafts, transcripts and updates of Joseph N. DiStefano's columns and stories about Philly-area business, which he's been writing since 1989.

DiStefano studied economics, history and a little engineering at Penn and taught writing at St. Joseph's. He has written thousands of columns and articles for the Inquirer, Bloomberg and other media, wrote the book Comcasted, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com, distefano251@gmail.com, 215.854.5194 or 302.652.2004.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano