Welcome to the fifth installment of The Wal-Mart Weekly -- a new weekly column dedicated to bringing you insight, wit, facts, results, opinions and just a bit of everything else when it comes down to a very hot topic these days: Wal-Mart.Last week I looked at Wal-Mart Stores' (NYSE:WMT) associates through three field trips to see what actual store employees were like, what they had to say and what impression they left with me as a representative of the company that employs them.
This week I'll be comparing prices on several items found at Wal-Mart and a few other retailers to see if Wal-Mart indeed has "lower prices." It's interesting to note that Wal-Mart does not advertise or promote that it "always has lower prices," but that it has "always low prices" -- which is a direct way of saying the retailer has low prices, just not the lowest price on everything, all the time. I've even known family members who take competitor's ads to Wal-Mart regularly and have the retailer match prices -- which they always seem to do. So, let's move on, shall we?
A little background
In what could be described as my second field trip for research purposes to Wal-Mart in as many weeks, I decided to look at several grocery items to determine where Wal-Mart's pricing sat compared to the competition. I had to almost completely focus on grocery items, since comparing general merchandise (exact same items) across retailers is exceedingly difficult these days (or so I found out). There are brands and lines made specifically for retailers by Chinese vendors these days, so one must find a brand name (and model) to really get a comparison that's 100% equal.
Sure, I could compare flat-panel TV prices across retailers, but there would be differences (in features, etc.) that would make a true comparison nearly impossible. I'm quite sure retailers want it this way to confuse customers and make it hard to compare pricing. I know that electronics manufacturers produce the exact same item for many retailers, with only small feature changes here and there, along with different model numbers to appease retailers who don't want consumers making "apples to apples" comparisons -- and hence, exposing the real pricing and related comparisons. On we go ...
Shopping like a normal consumer
Upon entering the first Wal-Mart store to do some competitive price hunts (one of two), I immediately went to the grocery aisle (these were Supercenters, of course) to pick out some very popular grocery items. I based this "popularity" ranking on my own experience of looking for certain grocery items on days when Wal-Mart grocery aisles are as packed as sardine cans.
I had already reached some conclusions by researching flat-panel TVs in Wal-Mart's electronics department -- three of the four models were ones I could not find at any other retailers in the area (Best Buy and Circuit City) and the fourth, an iLo model, must be exclusive to Wal-Mart, as iLo is a private label brand for the retailer (made by LG Electronics, at least for flat-panel TVs, I believe). When all there is to compare is a technology (plasma TV) and a size (42"), comparisons -- while still valid -- lose the cache of trying to "really" see which retailer has the lowest price at any given time on any exact item.
Anyway, here is the list of six grocery items I located at Wal-Mart that I would later compare to an Albertsons grocery store in the area:
Wal-Mart price, Albertsons price
- Honey Nut Cheerios, 18 oz. -- $3.39, $3.29
- Hunt's Ketchup, 24 oz. -- $0.88 , $0.99
- Kraft Macaroni and Cheese, 7.25 oz. -- $0.39, $0.49
- Naked Juice, 15.2 fl. oz. -- $2.38 , $2.99
- Silk Soy Milk, half gallon -- $2.49, $2.79
- Triscuit wheat crackers, 15 oz. -- $2.50, $2.79
- Hershey's chocolate bar, 1.25 oz. -- $0.33 , $0.50
Looking at pricing strategies
As I mentioned, Wal-Mart has had a habit (ever since I can remember) of never advertising "sales" or "specials" except during top shopping seasons like the end-of-year holidays. The chain simply displays an "everyday low price" on all items and does not use gimmicks like "double coupons" and frequent sales to lure in shoppers. Maybe it should, to help it revive flaccid U.S. sales. With grocery retailers like Albertson's, Kroger, Pathmark and Safeway constantly rotating "sale items" through circulars and in newspapers, I am pretty sure there are shoppers who plan shopping sessions around multiple retailers in order to get the best price on everything on that list.
Meanwhile, Wal-Mart doesn't advertise "sales" (except on special occasions) and lets the "everyday low prices" angle do the talking. Is this enough? Perhaps it is not. But, to a point, it doesn't need sales, as evidenced from the seven grocery samples referenced above. The problem? This marketing angle is stale and boring, even though in this case it is right on target.
Wal-Mart's actual prices -- what is the deal?
Something else I noticed was the oddness of actual Wal-Mart pricing. I never did see a price ending in ".99" while shopping. Instead, I saw prices ending in what seemed to be random numbers, like ".38", ".62" and ".76". I've read (and I believe) that Wal-Mart prices items throughout its stores (not just in grocery) in apparently random (but actually carefully selected) numbers to give the appearance of lower prices. The thinking is psychological and subliminal: Customers will think Wal-Mart really is giving them the absolute lowest prices when the price tags don't always end in the standard ".99". This makes perfect sense from a psychological marketing perspective.
Turning the tails on other retailers, all I saw were prices ending in ".x9" on almost every item (unless it was on sale), with the price ending in ".x8" or ".x7" sometimes thrown in for good measure. By the way, that "x" stands for some other number, like 2, 4 or 9. Common retail practice is to price items with the ending of 9 so as to not tip the consumer's mind into the next dime-based price bracket -- and therefore, influencing their thinking.
It does hold true after all
From this experience, Wal-Mart's claim of "everyday low prices" really does hold true from a grocery perspective. The retailer does have everyday "low prices," but perhaps that image is not enough for the retailer to continue goosing more sales from existing consumers and winning new (and former) customers into its stores. Prices alone, as we all know by now, are not the only criteria for informed shoppers these days. Style, experience, image, traffic -- all of these items can play into gaining a customer and making him or her loyal to shopping at a particular location. Ask Target about this after the second-largest discount retailer saw impressive quarterly gains all last year compared to year-over-year fiscal quarters.
Next week, I'll be looking at Wal-Mart's image problem on multiple fronts right now, and how the retailer can fix things (if it is not too late). I've mused on this in past columns, but there is so much to a much-needed Wal-Mart image makeover that a dedicated column seems appropriate. Until then, have a great week!











Reader Comments (Page 1 of 2)
3-29-2007 @ 8:29PM
bernard mcfadden said...
If you are such an expert, why is it that in this blog you show ignorance of Walmart's old motto "lower prices--always", which obviously could not be proved in every case so the courts forced them to drop it? On average, is is obvious that Walmart is lower than any of its competitors.
3-30-2007 @ 8:36AM
William Martin said...
I must compliment Bryan on his fair and balanced research of WMT. I still say that WMT is best overall and they will survive through it all.As I've stated before this is my biggest core holding for my children and grandchildren. As of now I stnd by it!
Billy Martin
3-30-2007 @ 9:56AM
East of Florida said...
Hands down, WalMart is the lowest on prices ...........I don't know where Brian did his "shopping comparison" experience, but there is an even larger cost savings in using WalMart where I live. However, one "pays" for the experience........many times, the Super WalMart in my area is out of common foods (including condiments, beverages, cottage cheese, breads) that I buy regularly. Perhaps, the inventory people don't keep a good watch on this part of the operation. My other distaste for shopping at WalMart is the very long lines at check out lanes (I can read an entire scandal sheet while standing in line; meanwhile, my frozen things are melting) and the crying/screaming kids, and the bathrooms smell strange ............. it is not necessarily a very bad smell, but it is certainly not pleasant. Also, I do not think my WalMart is kept very clean in the produce/frozen food/meat sections of the store. Thank you.
3-30-2007 @ 9:56AM
KB said...
FYI...I find grocery prices are better at Target.
3-30-2007 @ 10:34AM
Cheapskate said...
WalMart generally has the lowest everyday grocery prices. Unfortunately, they're inconvenient for regular shopping. (Too far away, too crowded, lines too long, etc.) So I do once or twice monthly stocking up, and leave the frequent bread & milk trips to a closer (albeit more expensive) store. I also shop the loss-leaders of all area grocery stores - those are typically prices that not even WalMart can beat. It's not uncommon for me to shop at 2 or 3 or even 4 stores in one day, stocking up on all the sale items. But, although it's a bit labor and time-intensive, I manage to feed a family of 4 (very well) for about $250 a month.
3-30-2007 @ 10:51AM
Paula said...
Interesting item. Coincidentally, my 15 year old daughter did an indepth comparison of prices at all 5 grocery stores available in our area. She also compared things like friendliness/helpfulness of employees, store cleanliness and convenience. Her findings??? ...There was no clear-cut "best" in all categories. Others may have different results because she used the items WE typically buy. She did not compare prices of store brand products unless she felt there was a comparable store brand in the competitors store. Walmart's biggest short-comings were in the quality of meat and sometimes produce as well as the availability of some specialty items. Bottom line...we love Walmart, but not exclusively!
3-30-2007 @ 10:48AM
Abell said...
I used Wal Mart, Bi Lo, Publix, The Pig, Kroger, and Food Lion for my comparison for 20 every week items. I can save around $8.00 shopping at Wal Mart.
I'm retired so I can shop any time of the day. Usually 7 AM is the best time for me.
3-31-2007 @ 8:17AM
claire said...
Surprised that a WalMart comparison was not done for WalMart. I have found different prices for the same item in different locations of Walmart. Can't understand the reason for this other than where the stores are located either in a depressed area or affluent one. Something should be done about that being changed so that the price of the item is the same in any Walmart Store.
3-30-2007 @ 10:52AM
ShopSmartly said...
If you did your shopping correctly. You would always get the best price. only buy on sale products. Every item goes on sale in a cycle or season. Your basics in groceries about every 3 to 5 weeks. I have four different grocery stores and three drug stores within five minutes of me. I buy nothing I need at regular price. I have Walmart, Target and Kmart within seven minutes of me. Shop smart. Compare and Save!! Don"t just buy for today. Think about next week and next month.
3-30-2007 @ 10:52AM
Sally said...
Wal Mart is the only place I know of where you stand in a check out line for 20 minutes then get treated like a criminal before you're allowed to take your purchases to the car. This is all beside the fact that they refuse to treat their employees decently. No wonder the employees could care less about customers! I don't do Wal Mart.
3-30-2007 @ 10:58AM
trukmek1966 said...
I'm not just about low prices. I will pay more for value, including better customer service, shorter lines, less crowding, stocked shelves and availability of shopping carts. I do not shop at Wal-Mart very often as I don't care to line the pockets of the greedy owners and managers who force labor, cheat employees, under-pay employees, hire illegal employees, discriminate against women in higher positions, etc.
3-30-2007 @ 11:01AM
Dutch Sampson said...
Sure Walmart has great prices we all know that. As far as comparision to other grocery stores such as Giant, Safeway, Food Lion,SuperFresh, etc., etc. they most likely are cheaper but i don't think you will find as much of a selection as these other stores. Seems to me as all the other stores are all about the same in comparison to each other once you apply their discount cards to your purchase. But I've found self service type of stores like Box and Save or The Dollar stores will beat even Walmarts prices. And iof course there are membership type stores like Cosco's (sp.?) B.J.'s, etc.where buying items in bulk are hard to beat. In conclusion shop smart. Check the adds, clip the coupons, and map your trip to the stores that have the good sales with the coupons. No use in saving a dime if it takes you an extra dollars worth of gas to get there! Plan your shopping carefully and buy from differnt stores as long as you have the time , patience, and you don't have to travel far you can save some major $$$$$. If you don't do those things chances are you either don't make the money to have a car (I'm on disability but always manage to get a friend to help out) to get you to these places or you make enough money as to where your really not that concerened if you spend the extra money so you can get in and out in a hurry. Good luck, ~ Dutch Sampson, Glen Burnie, Md.
3-30-2007 @ 11:23AM
Burton Lawley said...
Have always found the prices at WalMart to be more than competive with other stores. I generally shop at about 2:00 AM so never have trouble with long lines. I have never found the store near me to be out of many items, nor have I found the personnel to be anything other than friendly and helpful.
3-30-2007 @ 11:33AM
Arlene said...
The Wal-Mart in the small town where I live has HIGHER prices than the Wal-Mart stores in near by towns (30-35 miles away). I find this disturbing because I have to drive 30 miles once a week to do my shopping. If it were just a few items I would over look that but it is ALL grocery items,..as much as $1.50.
3-30-2007 @ 11:44AM
Laurie said...
I can't stand the long check outs at Walmart and I have never liked their meats. We have a New England grocery chain that I swear by...called Demoulas/Market Basket. As far as different stores having different prices...right here in NH there are Lowe's that do that. It's terrible! I haven't notice anyone else. But it sure should be wrong.
3-30-2007 @ 12:15PM
JRM said...
Mr. White,
By selecting only items you thought were "very popular" you negate any potential value of your survey. Wal-Mart is indeed low on price-sensitive items, but much higher on "blind" items--- the ones people don't buy on every trip to the store.
Yesterday I checked Wal-Mart's prices on a battery for my Panasonic cordless phone and it charged 50% more than my local hardware store. The corporation counts on you not checking and assumin that because it sells cheap milk and bread, that all of its items are a good value--not so.
3-31-2007 @ 9:00PM
Hedwig said...
I just read the results of this research on comparison pricing. I found it somewhat informative, but not much I havent figured out on my own especially the pricing methodes and gimmics used by merchants. One thing I'm wondering about, what about the "was this much, now lower" gimmic, yea really. One thing I'm totally turned off by is the piped in music. I won't stay one minute longer than necessary at most stores as the music completely nausiates me. I have nothing against music, but don't force feed me your brand of it. Worse yet, at WMT you often get a heavy dose of loud volume of booming coming from the car stereo and or electronics area, a total turn-off for us older folks and succeding at ruinig what little pleasantness one gets from shopping. I also have a problem with the twit that has to hold loud conversations on the hand-held all around a store. Showing consideration for others does no longer exist.
3-30-2007 @ 12:26PM
Luis said...
Comment #16 is dead-on. As a former Wal-Mart asst. manager, I can tell you that, while our end caps and flyer-advertised items were likely to be the best deals in town, our blind items were often marked up far higher than our competitors. I wish I could remember the article, but the American Independent Business Alliance ( http://amiba.net ) published an interesting analysis on the issue.
3-30-2007 @ 12:38PM
John Kent said...
There was a time months ago when I enjoyed buying Reser's Gelatin and Jello in tubs from you. Then you quit carry it and now I have to go to some other competitor here in Baton Rouge, La. to buy it. Shame on you.
John Kent
3-30-2007 @ 12:46PM
Larry said...
How fair are the owners of Walmart toward their employees, i.e. health benefits, wages, etc.?