Posted by: Dr. Grover B. Proctor, Jr. | 21 October 2013

Low Prices Truly ARE Guaranteed, It Seems


 
I heard about Walmart’s “Low Price Guarantee,” and I wondered if their prices are truly lower — and if so, by how much. I mean, did they merely keep their prices 2 or 3 cents below that of their competitors, just so they could accurately boast of “lower prices?” Were the prices appreciably lower? Or was it just not true? I decided to find out.

So, not that long ago, I chose 25 brand name items that the Proctor household has been known to buy, and then I collected the everyday, non-sale prices charged for those items by Food Lion, Harris Teeter, Kroger, and Walmart. (All of the stores were in my small town and were within just a few miles from each other.)

My little research project provided surprising, hard-to-argue-with results. If you put those 25 items in your basket at all four stores, Walmart’s competitors’ prices were 23% to 34% higher than what you would pay at Walmart. Here’s the breakdown:

Food Price Comparisons

Here are some of the specific facts that my study revealed. First, some basic level statistical analysis on the above prices demonstrated that Walmart’s prices on these 25 items, when compared with what their competitors charged, showed that Walmart’s prices are statistically significantly lower than all three other grocery chains. (A short summary of those stats is given at the bottom of this article, for all you fellow geeks.)

None of the three other grocery stores had a lower price on any of the individual items than that charged by Walmart — though Food Lion came close on a few of them. La Choy Rice Noodles (great on salads!) is a whopping 69% higher at Harris Teeter than at Walmart (though, admittedly, that’s only 77 cents difference). For reasons I’m still not sure about, Kroger’s price is 61% higher than Walmart’s for Daisy Sour Cream. Prices were closest among the four stores on two items: Bush’s Baked Beans and Tropicana Grovestand Orange Juice. (Walmart was 8% cheaper on average for both of those.)

Okay, okay. I know that some of you have decided to boycott Walmart for political, labor practice, or socioeconomic reasons, and the above facts will not dislodge you from your principles. It was never my intention to do that anyway.

But, my goodness. The prices truly are lower, and very significantly so! I plan to re-visit the 25 items at these grocers in a few months, to see if things have changed. I’ll post those results here also.


Statistical Analysis

H0: There is no price difference between grocery store A and grocery store B.
HA: There is a price difference between grocery store A and grocery store B.

Results from the Paired Samples t-Test (alpha = 0.05):

Box & Whisker plot(1) Results comparing Food Lion (total=80.76) and Walmart (total=65.85) showed a statistically significant difference in prices of identical items (p=.000). Therefore, the null hypothesis is rejected.

(2) Results comparing Kroger (total=83.04) and Walmart (total=65.85) showed a statistically significant difference in prices of identical items (p=.000). Therefore, the null hypothesis is rejected.

(3) Results comparing Harris Teeter (total=88.21) and Walmart (total=65.85) showed a statistically significant difference in prices of identical items (p=.000). Therefore, the null hypothesis is rejected.
 

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