Everywhere you look around Charlotte, things seem to be getting more expensive – property, school tuition, cars. But one major expenditure isn’t: Groceries.
Food prices have fallen across the board over the last three years at Charlotte’s four biggest grocers by market share: Harris Teeter, Walmart, Food Lion and Publix, according to an Observer analysis of 14 common grocery items. Prices fell the most at Food Lion during the three-year period, but Walmart had the lowest total price for the 14 items.
The reason for the price drop is two-fold.
For one, Charlotte’s grocery competition has intensified as chains such as Publix open more stores here, and as grocery giants take over smaller chains (such as Kroger buying Harris Teeter).
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The Charlotte metro area, which also includes Concord and Gastonia, had 529 grocery stores at the end of 2014, according to sales-tracking firm Chain Store Guide. By the end of 2016, that had climbed to 605.
“Retailers have become a lot more competitive with each other,” said Phil Lempert, a national supermarket analyst. “It’s a big win for consumers.”
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The second reason: price deflation. According to the Bureau of Labor Statistics, grocery costs have only started incrementally picking up this year after falling for nine straight months late last year, Bloomberg notes.
Charlotte’s groceries are about 94.2 percent as much as the national average, and rank among the lowest among the city’s southeastern peers, according to data from the Charlotte Chamber.
Expect grocery prices to keep rising steadily now, says Lempert, although a host of factors – from drought to bird flu – can affect food costs.
We took a look at how grocery prices fell in Charlotte over the last three years.
In May 2014, the Observer compared prices on a list of simple grocery items at Harris Teeter, Publix, Food Lion and Walmart, still Charlotte’s four biggest grocers by market share.
This year, the Observer repeated that comparison shopping July 18, but eliminated one item, since not all four stores now carry the same size box of Special K cereal. We recalculated the 2014 totals, then compared them to 2017’s. We did not use pricing based on loyalty programs or valued-customer cards.
We found that Food Lion prices have fallen 5.8 percent since 2014, the biggest drop of any grocer. The basket of 14 items, which included staples such as a 16-ounce box of Barilla spaghetti and a gallon of nonfat milk, cost $36.38 at Food Lion. That’s still slightly more than Walmart’s $32.06, down 5.6 percent from 2014. The Harris Teeter groceries cost $42.67, down 1.4 percent, while Publix’s cost was $40.08, down 5.5 percent.
Walmart, Charlotte’s No. 2 grocer by market share, has said it will continue to invest “billions” to lower prices on national and private brands through 2019, with a focus on fresh foods.
“We know price is important to our customers, including in the Charlotte region, so we’re proud to be recognized as a local price leader. Our Charlotte customers tell us that our low prices, high quality and broad assortment sets us apart from the competition,” Walmart spokesman Phil Keene said.
Salisbury-based Food Lion, whose parent company Delhaize merged with the Dutch grocery chain Ahold last summer, last fall wrapped up a $215 million project to redesign its 142 local supermarkets and lower its prices chain-wide on staples such as meat and produce.
“(We) look forward to continuing to invest in ensuring our customers have an easy and convenient shopping experience at our stores, backed by affordability, friendly service and fresh, quality products,” Food Lion spokeswoman Christy Phillips-Brown said.
Florida-based Publix has been expanding its local footprint ever since opening its first North Carolina store in Ballantyne in 2014. The grocer competes closely with Harris Teeter – it’s not unusual to see Harris Teeter and Publix stores being built or expanded virtually across the street from one another, like the ones in Cotswold.
Publix doesn’t have a loyalty program like Harris Teeter’s, although it does have “very aggressive ad pricing,” such as 50 percent off nearly 100 popular items per week, as well as a “comprehensive couponing policy,” Publix spokeswoman Kimberly Reynolds said. The grocer, she added, is looking forward to “continued growth” in Charlotte.
“Publix works hard to provide our customers value, which includes competitive prices, clean stores, a large selection of quality products in-stock, convenience and legendary customer service,” Reynolds said.
Harris Teeter lowered prices on thousands of items starting in 2014 when it was acquired by Kroger. The price cuts focused on organic and perishable groceries, upping its competitive ante with high-end organic grocers like Fresh Market and Whole Foods.
(The Matthews-based grocer’s roots go back decades in Charlotte: When Harris Super Markets and Teeter Food Mart merged in 1960, the chain became Harris Teeter. The grocer has been playing to shoppers’ sense of nostalgia recently: It opened a newly constructed store in South End this year with a retro look that’s a nod to the Harris Teeter’s second-ever store, which opened in that spot in 1952.)
“Harris Teeter strives to deliver to our shoppers the very best shopping experience, period, with friendly, knowledgeable associates; clean, well-maintained stores; upscale amenities; extensive selection and variety; increased fresh options as well as competitive prices,” spokeswoman Danna Robinson said.
What about cheapest-available, in 9 stores?
To look at prices a different way, the Observer conducted a different analysis. We bought the same five items, not specifying brands but simply choosing the cheapest available option, at each of nine grocers: Publix, Harris Teeter, Target, Walmart, Food Lion, Fresh Market, Trader Joe’s, Whole Foods and Aldi.
We chose the basic ingredients for meatloaf: a dozen large eggs, a gallon of skim milk, a loaf of white bread, ketchup and 1 pound of lean ground beef.
A few caveats, though: Not every store sold a 20-ounce bottle of ketchup. We therefore took the price of the biggest, cheapest bottle available, found the price per ounce, then multiplied that by 20. Also, at Fresh Market and Whole Foods, there was no 80 percent lean ground beef option, so we used 85 percent.
Of the list of nine grocers we looked at, Aldi had the cheapest total: $7.69.
Aldi has been hiring in the Charlotte region to staff future stores as well as existing, remodeled ones. The German grocer said this summer it plans to spend $1.6 billion to remodel and expand more than 1,300 U.S. Aldi stores by 2020, including nearly $48 million for 31 stores in Charlotte.
“We’ve seen attempts to beat our low prices before and we’ve always been able to go lower – it’s in our DNA and we’re built for it,” said Krysta Cearley, Aldi’s Salisbury Division vice president.
Aldi’s growth plans should intensify grocery competition in Charlotte, as should the entrance of another German grocer, Lidl, into the market. Lidl, which boasts comparable prices to Aldi’s, opens its first four stores in the Charlotte area in September.
In the Observer’s analysis, Whole Foods had the priciest groceries, with the five-item basket totaling $18.92 on July 18. On Aug. 28, the day Amazon closed on its $13.7 billion acquisition of Whole Foods and started lowering prices on several grocery staples, the same list was $18.78.
Experts say Amazon will continue to lower prices at Whole Foods stores.
The Whole Foods deal gives Amazon more than 460 new brick-and-mortar locations that it could use for other e-commerce transactions, such as pickup from Amazon lockers and returns of Prime orders, Lempert said. After all, he noted, 90 percent of all Amazon Prime members live within 10 miles or less of a Whole Foods store.
“It’s going to be the one-stop shop of the future,” he added.
And it isn’t yet clear how the escalating competition will play out: By lowering prices, grocers also eat away at their profit margins, which can – as at Bi-Lo in May – prompt layoffs and even store closures.