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Kantar: Walmart narrowly maintains basket price edge over Target

BY Marianne Wilson

Boston — Walmart continues to maintain its basket price advantage over Target, according to Kantar Retail’s semi-annual pricing study. But while Walmart maintained its lower-priced basket – with a leap even further ahead in non-edible grocery – the retailer’s basket was still only 1% less expensive than Target’s, the smallest price gap since the June 2012 study.

“Walmart’s slightly weakened stronghold on price leadership shows the difficulty in creating basket separation based on price,” said Laura Kennedy, principal analyst and primary contributor to the study. "These results emphasize the need for both retailers to pursue alternative methods to drive impression and value perception by their shoppers. The smaller price gap seems to reflect Walmart’s general shift toward a more nuanced and customized approach to EDLP (everyday low pricing). "

The 12th iteration of the semi-annual mass channel pricing study determines which retailer’s basket of grocery and consumable items offers shoppers the lowest price. The study reviews national brands and a sub-set of private label items.

Kantar Retail revisited the same co-located Walmart and Target stores in the Northeastern United States in June 2014 to re-assess a previously established basket of national brand items including edible grocery, non-edible grocery, and health-and-beauty aid (HBA) items. Only identical SKUs from both retailers were assessed.

Highlights of the study include:

• Walmart’s overall branded basket was just 1.2% less expensive than Target’s. Target narrowed the gap from the January 2014 study.

• Walmart maintained its lead in both grocery sub-baskets, widening the gap in the non-edible basket. Target’s edible basket was 10.5% more expensive than Walmart’s, even with two temporary price cuts and an equal number of “rollbacks” at Walmart.

• Target’s use of temporary price cuts declined again.

• Walmart’s basket featured twice as many rollbacks as in the last iteration.

• Gaps between prices for individual items at the two retailers narrowed.

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Plug and Play Reveals Three Trending Retail Technologies

BY Dan Berthiaume

I’m excited to announce a new partnership Chain Store Age is launching with Plug and Play Tech Center, an innovative Silicon Valley tech startup investor whose mission is to connect promising tech startups with retail corporations in an attempt to help retailers transition into the technological age. From time to time, you will be seeing Plug and Play-related content on our site and in our magazine.

To help kick things off, I asked the folks at Plug and Play to name three technologies that are trending in retail right now. The answers I got were mobile, beacons and image recognition. Here are a few of my own thoughts on the significance of these disruptive technologies to the current and future state of retail.

Mobile Gains Mass Appeal

Constant mobile connectivity has become a fact of life for most consumers, starting as young as the tween demographic and even reaching the Greatest Generation. Consumers are living omnichannel lives, using mobile Internet access to enhance and expand physical reality, and retailers should tailor their customer experience accordingly.

Beyond simple steps like using responsive design or native development to create mobile-optimized e-commerce sites, retailers should also employ more advanced mobile technology strategies. These include sending time- and location-based promotional texts, providing mobile self-checkout applications, and enabling access to product information and videos via barcode and QR code scanning.

A Beacon of Information

Beacon technology, which uses low-frequency Bluetooth transmissions to help mobile devices track their position relative to stationary beacons, is getting quite a bit of attention from retailers. Beacons offer retailers the opportunity to obtain immediate location and buying preference data from opt-in customers who visit their stores.

Beacons offer many potential uses to retailers. While the majority of attention has been focused on the applicability of Beacons to targeted, time-sensitive marketing, they offer retailers other possibilities, as well. For example, Beacons can help retailers determine how individual shoppers are traveling their stores, where they are stopping, where they are avoiding, etc. This data can then be amalgamated and used to determine at a higher level what demographic groups are coming into the store and what differences in may exist in where and how they conduct their shopping experiences.

Image is Everything

The advanced image recognition feature on the new Amazon Fire smartphone, called Firefly, which allows users to instantly create shopping lists and make purchases of items, has heightened retailer interest in this still evolving technology. Today’s consumers function on “Internet time,” and the ability to instantly research and purchase an item through image recognition satisfies the customer ‘s need for instant service and the retailer’s need for converting and capturing sales.

Image recognition can also help retailers “retail-enable” the broader consumer environment, and bring customer service and sales functionality to virtually any customer touch-point. Amazon is taking an early lead in using image recognition as a sales and customer experience tool, but other forward-thinking retailers still have time to enter the space before Amazon dominates it.


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Dollar General offers $9.7 billion for Family Dollar, outbids Dollar Tree

BY Marianne Wilson

Goodlettsville, Tenn. — The battle between the extreme discounters is heating up: Dollar General Corp. said Monday it has made an all-cash bid of $9.7 billion for Family Dollar, topping a deal Dollar Tree made last month. Dollar General is bidding $78.50 per Family Dollar share, which includes a $2.26 per share premium over Family Dollar’s closing price on Friday. The offer is $4 higher per share than the $8.5 billion deal with Dollar Tree.

“For Family Dollar shareholders, our proposal is financially superior to the current transaction agreement with Dollar Tree and would provide Family Dollar shareholders with a substantial premium and immediate liquidity for their shares,” said Dollar General CEO Rick Dreiling in a statement. “For Dollar General shareholders, the proposed combination of Dollar General and Family Dollar would be a significant strategic opportunity to create immediate and lasting shareholder value. For both Dollar General and Family Dollar customers, we would be able to provide better value and greater selection.”

Dreiling said that he would postpone his announced retirement if the deal goes through.

The combined company would have nearly 20,000 stores in 46 states. Dollar General expects revenue would hit $28 billion and for the deal to generate synergies of $550 million to $600 million on an annual run-rate three years after the deal closes.

Dollar General said it has committed financing for the $9.7 billion deal from Goldman Sachs and Citigroup Global Markets, including a $305 million termination fee that would be due to Dollar Tree if Family Dollar accepts another offer. The company also said it is prepared to enter into a definitive merger agreement with Family Dollar that is essentially the same as the agreement the store now has with Dollar Tree altered to adjust for the higher price and the divestment of stores.

In a letter to Howard Levine, chairman of Family Dollar’s board, Dreiling wrote: “As you know, we at Dollar General admire your company and its attractive footprint and business prospects. We have respect for Family Dollar, its employees and its leadership, and both Dollar General and Family Dollar share a commitment to serving customers in the communities in which we operate. As such, we were surprised and disappointed to find out you had entered into a merger agreement with Dollar Tree.”

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