Forget the days of roll-backs and ‘everyday low prices,’ because shoppers are no longer buying it. According to a recent survey by Morgan Stanley (NYSE:MS) analysts, 60% of consumers no longer think that prices at Walmart (NYSE:WMT) stores are lower than the competition. Of the 1,500 plus shoppers questioned, only 25% indicated that they believed Walmart’s prices were ‘significantly lower’ than prices at other supermarkets. 25% of respondents said that Walmart prices were equal to prices at other stores, 25% said Walmart prices were slightly lower than other stores, and 3% said they believed Walmart prices were higher than competitors. Sounds like a branding disaster for the wholesaler that made its name as a price-cutting machine.

How do Walmart’s (NYSE:WMT) actual prices correlate to popular opinion? Pretty closely in fact, as MarketWatch reports that “Walmart’s pricing lead over the grocers has narrowed to 15% to 20% lower from as much as 30% lower when he [Morgan Stanley's Mark Wiltamuth] did his 2008 grocery pricing surveys.” Wiltamuth, who orchestrated the study, initiated coverage on Walmart with an equal-weight rating, saying, “Merely having prices that are viewed as slightly lower is not good enough…The strength of Walmart’s low price image is closely tied to customer spending. Walmart may have to start reducing prices to stimulate its sales.” Same store sales at Walmart slumped in the first quarter this year for the seventh consecutive period.

With another slap in the face to the Bentonville, Arkansas based wholesale giant, Wiltamuth also recently entered into coverage on Target (NYSE:TGT) one of the Walmart’s chief rivals, citing promise of high returns from the company’s plans to expand into Canadian markets. “In our view, investors are overly focused on near-term (per-share profit) and the uncertainty surrounding the magnitude of Canada (NYSE:EWC) startup dilution,” the Stanley analyst said regarding his overweight rating on Target.

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