AOL Money & Finance

The Wal-Mart Weekly: Does Wal-Mart save you $2,500 per year?

Posted Apr 12th 2008 12:40PM by Brian WhiteBrian White RSS Feed
Filed under: Wal-Mart (WMT), Columns

More

Welcome to the 56th installment of The Wal-Mart Weekly, a 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.

This week's Wal-Mart Weekly will be focusing in one a rather high-stakes claim Wal-Mart Stores Inc. (NYSE: WMT) is now advertising into the mainstream media. The claim? The retailer saves the average American family $2,500 per year. To coin a phrase, them's fightin' words, yes?

Either Wal-Mart likes abuse from the media or it has substantiated facts to back up such a claim. In fact, there's so many variables that could conclude (or disprove) the retailer's claim that it could boggle all our minds collectively. So with that, let's start boggling.

Wal-Mart's claim to savings

When the world's largest retailer changed its corporate motto from "Everyday Low Prices" to "Save Money. Live Better" over a year ago, the shift was probably engineered to get the average American consumer to change the perception of Wal-Mart from a bargain store more to a money-saving assistant (without the fees). Just think about the difference: "Everyday Low Prices" immediately summons up a visual picture of a bargain hunter's paradise -- nothing more. Of course, that is what Wal-Mart had wanted its image to be for quite some time, even as it tried to recruit new shopper demographics into its stores to buy higher-end goods.

Well, that didn't work out so well (yet), and Wal-Mart either had a premonition or was finely tuned to the impending downward trajectory of the U.S. economy that really showed its ugly face in 2008. About a year ago, the mortgage industry was starting to show signs of impropriety, energy and gas prices were spiking ever upward, large car and SUV sales were plummeting, and the U.S. consumer was feeling the pinch. In a way, Wal-Mart changing its tune to "Save Money. Live Better" was uniquely positioned to take advantage of the "dollar stretching" attitude of the mainstream U.S. consumer that would not go away at all in 2007.

Even if you're not a Wal-Mart shopper, you save

A commercial that depicts a father and son preparing to buy a used car or a family taking off on a vacation doesn't sound all that unusual. Until you see Wal-Mart bags in both situations to help plant the idea that Wal-Mart's money-saving ability helped these families get to things they may have not afforded if they had shopped at other retailers. Yes, it's that mental connection that marketers want to make with consumers and shoppers -- but is it true? Does Wal-Mart's claim of "we can help you save $2,500 a year" based in reality or smoke and mirrors?

Try this on for size -- as you may have noticed, Wal-Mart's claim here is that it saves the "average American family $2,500 per year." Even if you're not a Wal-Mart shopper, you can enjoy your annual $2,500 savings? What? Huh? What economist team came up to that conclusion? Wal-Mart is making that claim based on the retailer's calculation on the average American household and the impact it has on those households -- even if they don't regularly (or ever) shop at Wal-Mart. Adam Smith, you have been vindicated.

Can Wal-Mart really claim that its impact on the average American family -- Wal-Mart shoppers or not -- really is affected by such a large savings amount per year (even indirectly)? While Wal-Mart Watch pretty clearly disagrees with the retailer's claim (not surprising), the National Advertising Division of the Council of Better Business Bureaus also didn't agree with Wal-Mart's claim here. In fact, it found that the "implied claim" in the retailer's advertisements is indeed misleading.

Is Wal-Mart really out to lunch, or is it just me?

A claim like "we save the average American family $2,500 per year" is bound to draw instant criticism from all sides, so what is amazing is the fact that the study from the Council of Better Business Bureaus stated that Wal-Mart's message was displayed in a way "for which the advertiser provided no support and, in fact, conceded that there was none." But we're not talking here about Wal-Mart's $2,500 claim to fame. We're talking about its implication that those savings could be used to help families struggling with everyday items like transportation or vacation expenses.

Which brings up the question -- does Wal-Mart just want the short-term face value of the message up for as long as possible before critics have it yanked off all advertising channels, or does the retailer really not think that a single challenge will arrive from such an outlandish claim in the first place? Surely the PR folks in Bentonville are not this clueless, so it makes one think of ulterior motives. Short-term advertising can sometimes generate long-term consumer sentiment, and maybe that was Wal-Mart's goal.

Wal-Mart's commissioned study in 2005 found that the retailer emphasis on low prices led to a 3% overall decline in consumer prices. Not Wal-Mart prices, but overall consumer prices. So then, the onus goes back to that study -- how was that fact determined? The conclusion was that Wal-Mart had a $287 billion impact on the American economy. Divide that by the number of U.S. census households and there's your claim, right? Cut and dry. Well, not so fast according to many Wal-Mart critics.

The beef was not in the "express claim" itself. In fact, it was found that Wal-Mart provided enough information to lead to a rightful conclusion that its impact on the U.S. economy can be translated into a $2,500 savings for the average American family per year. But when it comes to the "implied claim" that those savings can help families take overdue vacations and buy used cars, that goes over the line. Wal-Mart responded by stating that it "would be proud" to possibly change its implied claim in its advertising to ensure that the "positive impact we have for all American families is even more explicit."

Indirectly, Wal-Mart claims that it helped your family save $2,500 in the last year. How about directly? Can you attach a dollar figure to the savings amount that Wal-Mart helped you save in the latest shopping year? Without a precise, comparative journal of everything you bought at retail, that would be virtually impossible. But then again, I would posit that the consumer economy -- which churns two-thirds of the American economy -- is ruled by emotion and media more than logic and data. What do you think?

Stay tuned right here at BloggingStocks next week for another edition of The Wal-Mart Weekly. Shop safely and carefully this week!

Tags: featured, inc., wal-mart, wal-mart stores, wal-mart weekly, Wal-martStores, Wal-martWeekly, walmart

Reader Comments (Page 1 of 1)

Add your comments

Please keep your comments relevant to this blog entry. Email addresses are never displayed, but they are required to confirm your comments.

When you enter your name and email address, you'll be sent a link to confirm your comment, and a password. To leave another comment, just use that password.

To create a live link, simply type the URL (including http://) or email address and we will make it a live link for you. You can put up to 3 URLs in your comments. Line breaks and paragraphs are automatically converted — no need to use <p> or <br /> tags.

Symbol Lookup
IndexesChangePrice
DJIA-52.5310,238.73
NASDAQ-7.672,159.23
S&P 500-6.501,092.01

Last updated: November 12, 2009: 01:57 PM

BloggingStocks Exclusives

Hot Stocks

DailyFinance Headlines

Latest from BloggingBuyouts

TheFlyOnTheWall.com Headlines

BioHealth Investor Headlines

WalletPop Headlines

My Portfolios

Track your stocks here!

Find out why more people track their portfolios on AOL Money & Finance then anywhere else.

  • My Portfolio
  • Create a New Portfolio

BloggingStocks Partners

More from AOL Money & Finance

WalletPop Headlines