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Grocers across North America are experiencing a Hidden Price War that many seem unaware of. 

In years past, food retailers have experienced local pricing wars, often driven by new competitors within a market. Price investments are made across the store on national brand products like Tide and Frosted Flakes, followed by proclamations of “New Low Prices.” Competition within a market is typically quick to react, often neutralizing any effect within weeks. So what makes this price war different?

Endcaps with Everyday Low Prices and Rollbacks, Source: Associated Press

Two words best describe this “Hidden Price War.” Private Label (PL). Led by Walmart, and heavily influenced by Aldi, PL price investments are intense, and are changing the dynamics of how consumers are establishing their value equation with a retailer. In many cases, typical price spreads between a National Brand item and the PL equivalent have been destroyed and thrown out the door. Just a few years ago, if a consumer saw a PL item at 50% less than the National Brand item, they assumed that the PL item was of inferior quality. But because many retailers have stepped up their game on PL quality, that is no longer the case.

As we look at competitor pricing data across North America at Engage3, we’ve seen deep and broad price investments in PL pricing, at times in excess of 60% lower prices, with price spreads to National brand equivalents as high as 50% or more. 

We’ve also noticed that many retailers within a market are blind to their competitors’ PL pricing, and have not identified or reacted to these price investments. But based on positive financial results from retailers like Walmart, it appears that consumers have noticed and embraced these efforts. 

An Aldi cereal shelf featuring extreme PL savings, Source: CNN

The challenge for any retailer in 2020 will be to transform and increase the depth of their visibility into competitors, both locally and nationally. Knowing your competitors pricing is only the beginning. Reverse engineering your competitors pricing strategies to understand “what” and “why” they are pricing the way they are, provides the critical foundation to move from reactionary pricing, to market leadership. This includes understanding and monitoring not only your competitors’ Private Label pricing, but their Private Label assortment as well. Consumers have choices in a market, and the more you understand the factors and variables they have to pick from, the closer you’ll get to meeting and exceeding those needs.

For more information on private label products and the steps retailers are taking to market them, you can read our blog on the subject here. For more content from Lyle, you can watch his video on competitive visibility here.

Lyle Walker is VP of Strategic Enablement at Engage3, and is a lifelong student of all things pricing. Lyle has over 16 years experience working for retailers including Kroger, Walmart and Winn Dixie, and has spent 10+ years working with the development of pricing systems, including price optimization.


Stephen Edelman

General Manager - Head of Strategic Enablement