Wal-Mart is Further Putting the Screws to Grocery Chains: But Guess Who Benefits

Wal-Mart’s (WMT) “Market Basket Challenge” commercials running in 25 markets may be this fall’s ultimate attack ads (excluding the dagger-throwing in the presidential race, of course). In the ads, Wal-Mart compares actual baskets of products that customers have purchased to show how much cheaper Wal-Mart is than the traditional grocery store. In one such commercial, a fast-talking Wal-Mart dude takes a woman’s receipt from another store, finds the same items in Wal-Mart, and shows she can save 20%. They slap hands.

As CEO William Simon explained on Wal-Mart’s most recent earnings call: Wal-Mart always wins this challenge. Duh. The losers here: Supervalu (SVU), Kroger (KR) and Safeway (SWY).

WMT Chart

WMT data by YCharts

It turns out Wal-Mart’s ads are sending some customers over to the likes of “Whole Paycheck” to shop. They seem to be inspiring some customers looking for alternatives to check out Whole Foods (WFM) and The Fresh Market (TFM).

WFM Chart

WFM data by YCharts

Really, some grocers like Supervalu are managing to implode all by themselves, anyway. Wal-Mart’s ads are just the proverbial straw. As a William Blair report highlights, specialty food stores can take advantage of the ad-inspired discontent by offering different products, convenience and customer service.

From the editors of YCharts.YCharts Pro Investor Service includes professional stock charts, stock ratings and portfolio strategies.



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