Dive Brief:

• Target’s website is getting aggressive on price when it comes to household essentials and other consumer products, matching, nearing or beating Walmart.com on several items compared by the online research team for Clark Howard.

• The researchers compared only exact SKUs sold online, looking at 30 brand-name products in categories including health and beauty, cleaning supplies, food and toys, according to the report.

• "Walmart was less than $5 cheaper than Target on nearly $600 worth of merchandise," author Mike Timmermann noted on in a blog post. Target’s full tab came to $593.31 while Walmart’s basket cost $588.58. Target RedCard holders would get another 5% discount; each order would meet the threshold for free shipping from both merchants.

Dive Insight:

Target appears to be making good on last year’s promise to drill down prices on consumer goods. Last fall, the mass merchant said it looked at the products "most important" to its customers and made sure they’re priced right on a daily basis, rather than confusing them with weekly specials or bonus offers.

While the Clark Howard comparison is an informal look, research from data scientists backs up the consumer advocates’ work. Earlier this year, Profitero found that the most intense price competition is among Walmart, Target, Jet and Amazon. On average, the average online prices of those first three combined are just 4.5% more than Amazon, Profitero found. Walmart is offering identical prices to Amazon on more than half (53%) of all products — compared to 37% matched by Target and 35% by Jet, according to that research. 

Several items were priced exactly or nearly exactly, Timmermann found. "Did you notice how some prices were just a penny or two off?" he wrote. "The retailers are clearly watching each other’s every move!"

They are indeed, according to other research from Profitero, which warned that brands are taking the brunt of the "destructive game of follow the leader." In some cases, though Amazon's pricing algorithms are instrumental in stoking the pricing competition, the e-commerce giant will drop products or brands that are too cheap to be profitable. "Long term, brands need to rethink item profitability," Profitero Vice President of Marketing Mike Black wrote in a blog post, noting that sometimes it's Target that triggers a price drop. "One strategy is redesigning products so that they’re smaller or require less packaging, thereby making them less costly for Amazon to stock and ship. Another strategy is developing products that cost less to make and therefore have more of a margin buffer when prices inevitably drop."

Consumer product categories seem more prone to price wars with Amazon than non-CPG categories, with Amazon losing about 6.5% of its pricing advantage in that area. Target's average CPG prices online are within 6.3% of Amazon — a 10.6 percentage point swing, Profitero found. Similarly, Jet's CPG prices were only 4.3% higher than Amazon.

Target and Amazon are making up for the lean margins in commodity sales by developing private labels. Target is in the midst of an assertive differentiation campaign, particularly in apparel, home goods and furniture, and electronics — possibly explaining why the retailer's non-CPG prices are 16.9% higher, on average, than Amazon.

But Amazon is countering that with its own exclusives, indicating there's not just a price war but also a differentiation war brewing. Half of Amazon's best-selling items aren't available through its competition, according to price tracking and data firm Prisync; meanwhile, on the other half, on average, Amazon is about 8% cheaper than Walmart, according to that research.