Walmart, Kroger, and Dollar General are slashing prices

Thomson Reuters

Competition is heating up between America's biggest grocery chains, and food prices are falling as a result.

Dollar General said Thursday that it's cutting prices on hundreds of items across 2,000 stores as it battles slowing sales growth.

"These price reductions are meaningful and recognizable," Dollar General CEO Todd Vasos said in an earnings call. "These are the items that will actually drive additional foot traffic into our stores."

The strategy follows in the footsteps of Kroger, Trader Joe's, and Walmart, which have also been slashing prices this year.

Kroger recently lowered the cost of 1,000 popular grocery items in 120 of its stores, retail consultant David Merrefield writes on industry website The Robin Report. It's also in the process of hiring 14,000 people at its 2,800 stores to boost customer service. 

Prior to Kroger's cuts, Trader Joe's quietly dropped its prices and Walmart revealed it was reducing prices on hundreds of items in its grocery department with a particular focus on fresh produce, consumables, and over-the-counter drugs. 

Walmart's price cuts are part of a multi-year, multi-billion-dollar investment that Walmart launched in the first quarter of the year. 

The grocery price wars are curiously cropping up at the same time that German discount grocer Aldi expands its footprint in the US. 

Thomson ReutersAldi has about 1,500 stores in the US with plans to open 500 more stores over the next two years as part of a $3 billion expansion.

Aldi and rival discounter Lidl have upended the grocery market in the UK in recent years, forcing the nation's largest supermarkets to dramatically cut prices and lay off workers to stay competitive.

The CEO of Asda, the UK's second-largest grocery chain, has called the new competitive environment created by Aldi and Lidl "the worst storm in retail history."

"When we set the plan, I don't think anyone anticipated the market being in meltdown," Asda CEO Andy Clarke said last year after the Walmart-owned company reported its worst quarterly sales drop ever.

In a price check last year, Business Insider found Aldi's prices were roughly 30% lower than Walmart's. Aldi and Lidl are both planning rapid expansions in the US.

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