Dollar General
- Dollar General has hiked food prices more than Walmart and Kroger, Bank of America analysts found.
- The analysts visited stores in Dallas in February and compared grocery costs with three years ago.
- Walmart and Aldi had the lowest prices, according to the analysts.
Dollar General stakes its reputation on low prices. But the chain might not be the best value for groceries.
That's one takeaway from a study by analysts at Bank of America published on Thursday. The study documented prices on a range of grocery items in February at retailers in Dallas, including Walmart, Kroger, Target, Dollar General, and Aldi, among others. The analysts then compared those prices to data collected at the same stores in 2020.
At Dollar General, prices rose 36%, the steepest increase of all the retailers, Bank of America analysts Robert Ohmes and Kendall Toscano wrote. Across all food retailers, prices were 22% higher compared to three years earlier.
Dollar General did not immediately respond to Insider's request for comment on the report.
Those higher prices could be partially due to Dollar General's greater reliance on canned vegetables, pasta, and other shelf-stable items. That group of products, which grocery industry experts call "center-of-store items," "has been more inflationary vs. categories like produce," the analysts wrote.
Dollar General has spent years adding more fresh produce to its offerings. The chain said earlier this month that it will have produce in 5,000 stores — roughly one-quarter of its entire network — by the end of 2023.
Several items that the Bank of America analysts purchased at the Dallas Dollar General also rang up higher at the register than the prices posted on the shelf, according to the report. Dollar General has faced investigation in Ohio for similar problems. Inspections at stores in Summit County, Ohio, for instance, found that 19% of items had prices at the register that didn't match what was on the shelf tags, Cleveland.com reported in February.
"We think a challenging labor environment could potentially be limiting dollar stores' ability to accurately reflect price increases at the shelf level," Ohmes and Toscano wrote.
The price of a cart of groceries rose less at full-service grocers, according to the report. At Kroger, prices rose 21%, roughly in line with food inflation since 2020.
Walmart and Aldi had the lowest grocery prices across a range of products, from meat and seafood to packaged goods, according to the study. Aldi was cheaper than Walmart in every category other than household and personal care goods.
A basket of 33 items at Walmart cost $187.50, according to the study. A comparable selection at Target totaled $194.15, while the cost at Dollar General was $201.14. At Family Dollar, another chain of dollar stores, it was $203.67.
Inflation has slowed down in recent months, though it remains historically high for products such as food. The Consumer Price Index for food at home, a key indicator of grocery prices, rose 10.2% year-over-year in February. Prices for products like coffee and butter have been among the hardest-hit.
In response, some shoppers have sought out cheaper versions of products, buying store-brand items instead of products from big names like Kraft and General Mills. Consumers have also turned to Dollar Stores, given their reputation for inexpensive stuff, CNBC reported in February.
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