Three Retailers Wolfe Research Likes (And Two It Doesn't)

In a report published Thursday, Wolfe Research analyst Scott Mushkin commented that first hand visits to various retailers across Southern California once again revealed the pressure that both

and

are facing. Mushkin noted that

continues to compress the premium to Wal-Mart while also increasing its lines of natural and organic food. The analyst added that Kroger "continues to turn the screws" on its hi-lo promotional pricing strategy to drive sales and customer loyalty. In Southern California, Kroger reduced its premium to Wal-Mart to less than 10 percent from nearly 20 percent just 10 months ago. At the same time,

has widened its discount in produce pricing and offers consumers a cheaper basket of goods. In fact, a pricing survey showed Sprouts Farmers Market to be priced at a 10 percent discount on a 60-item basket placing the company at the forefront of the "pure foods movement" and appeals to the middle-income consumer looking to eat healthier while maximizing their budget.