Wal-Mart’s market share climbing in US grocery sector

Wal-mart Stores now accounts for more than $1 in every five spent on groceries in the US – and its market share is growing rapidly at the expense of traditional grocery chains.

Loop Capital analyst Andrew Wolf estimates Wal-Mart’s market share is now 21.5 per cent of the US’ $800 billion annual grocery sales. The Arkansas retailer increased its domestic sales by 2.9 per cent in the last quarter alone, almost double its 1.6 per cent growth of the preceding quarter.

“Wal-Mart is taking back share from the traditional supermarket at an accelerating rate,” Wolf told CNBC.

“Wal-Mart’s last period of sustained outperformance versus the supermarkets was 2009-2010, while from 2013 through the third quarter of 2016, the supermarkets outperformed Wal-Mart [on a same-store basis].”

“Thus, the last quarter of outperformance appear to mark a potential major inflection point for Wal-Mart after having been a [same-store] share donor since 2013.”

The world’s largest brick-and-mortar retailer has reportedly cut prices on a raft of grocery lines as it aims to draw customers away from grocery chains Kroger, German discounter Aldi and other regional US rivals.

“Kroger has discussed that while certain markets are indeed more competitive, such as those in which Wal-Mart is changing prices, certain other markets are less competitive than normal,” Wolf told CNBC.

“Like Wal-Mart, Kroger is pursuing an e-commerce grocery ‘click and collect’ model, for which customers order online and pick up their orders at store,” Wolf said. “We believe this will be an increasing feature of US grocery shopping going forward.”

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