Walmart Food Prices at Two-Year High

Walmart has rolled back its rollbacks. Earlier this year, the retailer tried to spark sluggish U.S. sales by lowering its prices — already bargains — even further.

The company will meet with the investment community at its Bentonville, Ark., headquarters this week. There, executives might offer more hints about Walmart's direction.

Carlos Barria / Reuters

One analyst called it “an initiative that screams, ‘Price! Price! Price!’ ” These rollbacks, as they are known in Walmartspeak and in the company’s advertising, were intended to overwhelm the shopper. In May, according to one shopping website, the price of a 40-oz. bottle of Heinz ketchup, which had $2.42, was chopped to $1.00. Kraft mac and cheese, which had been going for $3.58, was reduced to $2.50. The rollback of a 50-oz. bottle of Tide laundry detergent, which was priced in the $7.48-$8.12 range, gave shoppers a $2.50 discount. Walmart expected a flood of customers to its stores, which would help lift the company’s stock out of its rut and get Walmart rolling again.

Instead, cutting prices depressed sales, as shoppers took the bargains and ran. For the quarter ending July 31, Walmart’s U.S. same-store sales fell 1.8%. The company’s same-store sales have now fallen for five straight quarters. Of the rollback strategy, Bill Simon, the president and CEO of Walmart U.S., told investors at a September conference, “It did not do what we had hoped it would do. It did, however, drive price perception. It did not drive sales or traffic.” As a result, Walmart rolled back the deeper discounts, and prices started inching upward this summer. According to a new report from J.P. Morgan, the price of a 31-item basket from a Walmart store in Virginia rose 2.7% in September alone. Walmart prices have jumped 5% since the start of the year and have been at their highest levels in the 21 months J.P. Morgan has tracked pricing data. (Read about Walmart’s March 2010 slump.)

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