The most recent iteration of a pricing study conducted by Credit Suisse shows Target was 4.7% more expensive on a basket of items in Chicago and Dallas compared with 4% the prior month.
The 4.7% gap with Target is the widest seen since last June, however it does not take into account the Target REDcard Rewards program, which reduces prices by 5% for those who pay with a Target credit or debit card. So as far as REDcard holders are concerned the companies are at price parity and substantially lower than others in the market with an average gap around 17.7% in May, up from 16.5% last month. The gap with Walgreens and Albertson’s is even more substantial, at 28% and 25%, respectively.
“While recent commentary from some companies, notably Dollar General and Walmart, suggest that the lower-end consumers are starting to feel the strain of higher prices, we believe most retailers have been successful in passing through cost inflation and will look to continue to do so,” according to Credit Suisse. “Thus far the pricing environment has remained rational, although the key player to continue watching is Walmart.”