Target Canada’s new prices undercut Walmart, study suggests

Target Canada appears to be outgunning Walmart Canada at its own price-cutting game.

Comparing prices on nearly three dozen identical national brand name products at each discount store, retail experts found the combined cost at Target was several percentage points lower than the same basket at Walmart.

“We found that the price of Target Canada’s overall basket was 3.9 per cent less expensive than Walmart’s,” Robin Sherk, director of retail insights at researcher Kantar Retail said in an email message.

That’s a departure from prices Target initially offered last year when it was rolling out a flurry of new locations across Canada. “In our initial study the retailers’ basket values were effectively even,” Sherk said.

Data from the initial comparison shows that Target’s prices were somewhat higher.

The Kantar report assessed 33 items across grocery as well as health and beauty products and found the Target basket cost $158.65 versus $165.16 as Walmart. A third of the items in the Target basket were on promotional sale, Kantar said, while one item was on sale at Walmart.

MORE: Here’s exactly what Target plans to sell to woo back Canadians 

A previous comparison was conducted in March 2013 at competing locations in the greater Toronto area, when Target first launched its first wave of stores.

Since then, the U.S. department store has stumbled in Canada, where it has battled against perceptions and dissatisfaction from Canadian shoppers that its prices don’t match those found at U.S. locations frequented by Canadians.

The problem has persisted.

“While Target handily led this basket, it continues to struggle to shift pricing perception,” Kantar’s Sherk said.

TNS Canada shopper data shows that half of Target shoppers said the retailer delivered “very good” to “excellent” value for their money. The response was 64 per cent among Walmart Canada shoppers.

MORE: Walmart slashing prices to win more Canadians grocery business

Kantar noted that Target’s Redcard loyalty program also continues to be “underpenetrated” among Canadian shoppers, suggesting “Canadians’ unwillingness to buy into Target’s broader value proposition.”

Inventory mismanagement has also plagued Target Canada, but a new leadership team says it’s working quickly to address the problems.

Still, the lower prices in the grocery and beauty aisles are part of a wider revamp aimed at winning Canadian shoppers back.

“For Target, sharpening price is one of the key initiatives being implemented in its turnaround strategy,” Sherk said.