Walmart Is Investing In The Price War. Its Rivals Are Just Cutting.

Greg Foran ran Walmart U.S. until 2019. He now runs Kroger, and last month he told Bloomberg that the nation’s largest supermarket chain plans its biggest price cuts in years, aimed squarely at Walmart and Costco. The backdrop has not loosened. The May Consumer Price Index put food-at-home inflation at a 2.7% annual rate, down slightly from April but still near a three-year high, with beef prices up nearly 13% from a year earlier and overall inflation running at 4.2%.

Foran is not alone in leaning on price. Other chains have moved the same direction, and the more important point, according to Michael Infranco of the retail intelligence firm RetailStat, is that the shift looks durable. Shoppers who once tolerated higher prices and drifted back to old habits now expect retailers to keep proving they are holding costs down, a change he reads as a lasting reset rather than a passing reaction.

Walmart Is Playing Offense From A Position Its Rivals Cannot Copy

Walmart enters this fight from advantage, and its most recent quarter shows why. For the period ended April 30, reported May 21, Walmart U.S. posted net sales of $117.2 billion, up 4.5%, with comparable sales excluding fuel up 4.1%. Transactions rose 3.0% while average ticket rose 1.1%, a sign the growth is coming from more trips rather than higher prices per trip. The company reported broad-based market share gains and noted that grocery and general merchandise both outgrew health and wellness.

Walmart’s leadership has been direct about the strategy. On the May 21 call, Chief Executive John Furner said customers under financial strain are turning to Walmart for value, and that the company has extended the price rollbacks it began last year to about 7,200 currently in place. Chief Financial Officer John David Rainey said rollbacks are up more than 20% from a year earlier and are reinforcing Walmart’s price leadership, with customers responding through higher unit volumes. Rainey framed price as Walmart’s best use of capital right now, saying the strongest return available is to “invest in the customer and invest in price.”

Neil Saunders of GlobalData Retail explained why that math works for Walmart specifically. Its price investments are built to hold its standing as the price leader, and it chases grocery customers hard because grocery traffic feeds the higher-margin businesses where more of its profit sits. Walmart’s own quarter shows those businesses scaling, with advertising up 36%, Walmart Connect up 44% excluding VIZIO, and membership income growing double digits.

That is why challengers face such a climb. Research from AlixPartners earlier this year found that just 13% of shoppers who regularly visit traditional supermarkets believe those stores have low prices. A grocer can cut aggressively and still lose the argument, because the perception of everyday value has already settled on the discounters.

For Suppliers, The Cost Pressure Is Structural, Not A Phase

For suppliers who sell grocery through Walmart, the read is less about who wins the price war and more about why it does not end. A customer that calls price its best use of capital has a standing reason to hold retail prices down, and that reason does not soften when a given quarter’s inflation reading ticks lower. Expect the cost-down conversation to stay live through line reviews whether the costing environment is easing or tightening.

Foran’s Kroger sharpens the picture. A grocer rolling out its biggest price cuts in years has every reason to ask suppliers to help carry them. Tom Furphy of Consumer Equity Partners, a former Amazon and Wegmans executive, said grocers commonly look to suppliers for help on price, reasoning that the retailer should not be the only one absorbing the cost. He also pointed to a sharper tactic. Rather than cutting across the board, retailers get sharpest on the items shoppers price-check most, while holding or recovering margin across the mid and tail of the assortment. For suppliers, the implication is that the pressure will concentrate on the SKUs that anchor a category’s price image.

The pressure lands differently by segment. For 1P suppliers, it arrives directly, in cost negotiation and line-review pricing where Walmart sets the shelf price. For 3P Marketplace sellers, it arrives as Buy Box price-competitiveness pressure and category-level value expectations rather than a direct cost ask, though the demand to be sharp on price is the same.

Saunders noted that shoppers now use more stores than they did before the pandemic, splitting trips to find the best price in each category, and that many still have not made peace with what a grocery run costs. That behavior keeps every large retailer competing on price, and it keeps the question of who absorbs that cost pointed back at the supplier base. Walmart’s grocery-led volume and share gains this quarter are evidence the model is doing what it is designed to do, which means the price discipline that shapes every grocery supplier’s Walmart business is structural to how the company grows, not a passing feature of this inflation cycle.

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