March 26, 2014 at 12:18 PM ET
If the thought of extreme couponing drives you crazy but grocery prices wipe out your budget, maybe it’s time to try a different type of store.
A three-way comparison by Cheapism.com examined retailers with three different models for selling groceries: Kroger, a traditional grocery store and umbrella brand for chains across the U.S.; Wal-Mart, a big-box multinational that tallies more than half its sales from groceries; and Aldi, a German-owned discount grocery chain with a foothold in 32 U.S. states. We found that Aldi, with its bare-bones approach and emphasis on store brands, is easily the cheapest grocery store overall.
Cheapism visited one location for each store in the Columbus, Ohio, area and priced 37 products from a variety of departments. We chose identical items (brand and size) whenever possible and like items otherwise. Aldi does not carry well-known brands but stocks in-house labels, so we checked out a selection of store brands at Kroger and Wal-Mart, as well. Where sizes differed, we determined a unit price and then figured a per-item price for the same quantity at all three stores.
Aldi emerged the cheapest by far. The shopping cart total came to just $72.30, besting Wal-Mart by more than $13 and Kroger by more than $21 (before savings with the Kroger Plus Card). Aldi keeps prices low by cutting expenses to the bone. Shoppers bag their own groceries with bags brought from home and deposit a quarter to use a cart (the change is refunded when the cart is returned). Store hours are limited (forget about 24/7 shopping) as is the selection of items — about 5 percent of the inventory found in a traditional grocery store.
The model seems to be working, however, and Aldi claims many fans, including Private Label Store Brands magazine, which recently named the chain Retailer of the Year for 2014. Shoppers we interviewed said the store brands are comparable in taste and quality to brands carried by the big-name grocery retailers, and the shopping experience is very customer-friendly.
Still, Aldi displays a few flaws. The lean selection is too spare for some consumers — no deli, for example, nearly all in-house brands, and often just one size of a product — and the quality of produce and canned and package goods disappoints others. At present, the chain operates about 1,300 locations.
Wal-Mart should serve frugal shoppers well in the absence of an Aldi. The items in Cheapism’s shopping cart, which included mostly store brands, totaled $85.88. The mega-discount retailer maintains a price-matching policy that honors competitors’ advertised prices on identical items (brand, contents and quantity) at the register. The policy covers other grocery stores’ preferred shopping card discounts, helping solidify a price edge over Kroger. Wal-Mart holds a particular advantage when it comes to brand-name items: 20 out of 26 cost less than they did at Kroger (19 when accounting for loyalty card prices).
Consumers offer a mixed appraisal of the Wal-Mart store brand Great Value. A Cheapism Facebook poll revealed that many frugal shoppers consider the brand satisfactory, and Wal-Mart was the clear leader when respondents ranked the three retailers on quality and overall value. But reviews posted elsewhere online are less complimentary about the in-house label, and some note that produce often looks wilted and generally unappetizing.
Kroger was the most expensive grocery store in the sample, with a receipt total of $93.73 — more than $21 higher than Aldi. When Kroger Plus Card prices were factored in, the bottom line dropped to $86.78 (a savings of $6.95) — still more expensive than the competition but inching close to Wal-Mart. Kroger’s loyalty card program offers rewards in the form of lower prices on groceries and on fuel when filling up at a Kroger pump or select gas stations. Customers can earn as much as $1 off each gallon of gasoline on one purchase up to 35 gallons.
Selection at Kroger is slightly better than what Cheapism found at Wal-Mart and definitely superior to Aldi. For example, Kroger was the only chain that maintained fresh meat and seafood counters. In-house brands, including the Kroger Value label (the retailer’s low-price brand), garner accolades from frugal shoppers and experts. Trade publication Private Label Store Brands named Kroger its 2013 Retailer of the Year. Consumers we spoke to also commend the shopping experience, a factor that earned Kroger more points than Wal-Mart and Aldi in this grocery store face-off.
Shoppers who choose a grocery store on price alone will head to Aldi, which boasts decent store brands and a unique format that makes for cheap, no-nonsense shopping. Wal-Mart stands out for certain price advantages and inventory that extends far beyond groceries, while Kroger’s strong suits are the overall shopping experience and generous loyalty program.
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