Do Price Cut Announcements Pay Off?

ALDI and Giant Foods both recently announced new rounds of price cuts as food prices remain significantly above pre-pandemic levels.

ALDI said it was reducing prices “amid stubborn inflation” on more than 250 “summer essentials” that support picnics, barbeques, and travel. Price reductions called out include Black Angus sirloin steak, to $6.99 a pound from $8.49 a pound; organic granola bars, to $3.49 from $3.99; and French baguette; to $1.49 from $1.59.

The program, expected to deliver $100 million in savings through Labor Day, builds on a price-cut program announced in May 2023 that reportedly saved shoppers more than $60 million.

“With more experts warning of persistent inflation, the time was right to deliver even greater discounts on our already low prices for the second year in a row,” said Dave Rinaldo, president at ALDI U.S., in a statement.

Giant Food lowered prices on “hundreds of items” within its private brand while expanding its Flexible Rewards loyalty program, offering 2x the points for every dollar spent across its private brand range.

“At Giant Food, we have always offered great savings to our customers through our weekly Bonus Buy promotions,” said Ira Kress, president of Giant Food, in a press release. “With our new program, we aim to introduce more shoppers to our lower-cost store-brand items, which deliver the same quality as national brands.”

Among other grocers, Giant Eagle last year announced a plan to “reduce and control” prices for almost 800 grocery products by an average of nearly 20%, while Lidl dropped prices on more than 100 items at all U.S. stores in 2022 as inflationary food prices began drawing attention.

In 2019, Whole Foods introduced a third round of price cuts in a bid to reduce its “wholesale paycheck” reputation.

However, price-cut programs and price investment call-outs aren’t a regular occurrence across major U.S. chains, particularly compared to a price war that has broken out among grocers in the U.K. Tesco, ALDI, Sainsbury’s, Waitrose, Lidl, Ocado, and Marks & Spencer in the U.K. market have steadily been announcing rounds of price cuts, investments in price reductions, and price locking and price matching schemes as inflation has become a hot-button issue.

Walmart, which in 2010 broadcast a major “rollbacks” campaign lowering prices on roughly 10,000 items, hasn’t played up price cut rounds in advertising as much in recent years, although lowering prices remains a core strategy. On its fourth-quarter analyst call, Walmart officials said the number of products getting rollbacks is up roughly 50% compared to last year.