Retail

Trader Joe’s Coming Price Cuts

Could the price war between Whole Foods, the once notoriously expensive grocery chain (oft referred to by critics as “Whole Paycheck”), and notoriously inexpensive outlet Trader Joe’s be heating up? It appears — hold on to your organic heirloom tomatoes — that may be the case.

As shared by Yahoo Finance, a recent analysis conducted by Deutsche Bank, in which the prices of 77 items were compared between the two stores, found that Trader Joe’s had widened the gap to 26 percent between its and Whole Foods’ prices. This cost savings has increased from a previous 2013 analysis conducted by the firm. Trader Joe’s prices were 30 percent cheaper than Whole Foods on perishable goods and 24 percent cheaper for nonperishable goods, while Trader Joe’s private-label items came in only 15 percent cheaper than Whole Foods’ 365 private label.

The price reduction seems to have forced Whole Foods to follow suit with its own price cuts on similar items, according to Deutsche Bank Analyst Karen Short. In a research note, Short stated: “[Trader Joe’s] might be once again catching [Whole Foods] off guard because prior checks have not shown such disparity.”

With 500 stores in the U.S., Trader Joe’s has increased its retail footprint significantly in the past few years, while Whole Foods has expanded more slowly. According to the story by Yahoo Finance, the latter chain plans to open three more of its new 365 concept stores in 2016 and 10 more in 2017.

The company says that it has been cutting prices across the board, as well as highlighting more limited-time discounts. Whole Foods will also be introducing a range of lower-priced products at its new chain of 365 by Whole Foods Market stores. Short notes, “The wide price delta between TJ’s private-label products and [Whole Foods’] ‘365’ private brand … was a surprise to us given that the ‘365’ brand strategy has generally been to match TJ’s on price in private label.” She goes on to point out, “[Whole Foods’] private label is meaningfully higher in quality and, therefore, justifies a premium.”

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