Wal-Mart’s Price-Match Illusion
Written by Evan SchumanWhen Wal-Mart on Monday (April 11) rolled out its new price-match program, it said it would match a rival’s price, even if the customer doesn’t have a copy of that rival’s ad. In reality, that’s not the case. Not even close.
Wal-Mart’s announcement made it one of the first major chains to do away with the need for the customer to produce the dead-tree advertisement that Wal-Mart is being asked to match. But that paper document is being replaced—to a major degree—with associate discretion. Will shoppers be happy trading greater convenience for less consistency?
The price-match change is part of a much bigger campaign, where Wal-Mart is trying to regain its low-price reputation. The chain is characterizing the price-match policy as “simplifying” and issued a statement that clearly said “customers do not have to bring in a competitor’s advertisement. If customers find a lower advertised price, we’ll match it at the register.”
But in reality, that’s not entirely the case. First, stores will be asked to more closely track local competitors and associates will be given lists of rivals that the store has established are offering better prices. “Our local stores are now expected to maintain a list of local competitive ads at the register to help customers find the best possible savings,” said Wal-Mart spokesperson Amy Colella-Lester.
When the Wal-Mart store’s management discovers those lower prices, will it immediately reduce the price on that product for all customers or do nothing and wait for a customer to ask about it and then match it at the POS? “It will be decided on a case-by-case basis,” Colella-Lester said.
As a practical matter, though, will those prices ever be changed universally at a local store? How often would corporate want a store’s general manager changing local prices? The price match is more attractive for two reasons. First, it sidesteps all of the problems associated with lots of local price changing.
Second, it means that customers who don’t know about the lower price and, therefore, don’t request the price match—which will almost certainly be the vast majority of shoppers—will be paying the higher price. From a retail perspective, that’s a win-win.
But what if the customer is asking for a price match that is not on the list at POS? Given the huge number of SKUs at a typical Wal-Mart, it’s certainly likely that many prices from local merchants could change—especially during short-duration sales events—without Wal-Mart noticing, especially with much smaller rivals.
When the product is not on the list, that’s when things get tricky. By the way, the confusion starts with Wal-Mart’s news release phrasing. In that statement, the reference to “customers do not have to bring in a competitor’s advertisement. If customers find a lower advertised price, we’ll match it at the register,” is followed by an asterisk. That asterisk leads to a footnote that says, “Walmart will match the price of any local competitor’s printed ad for an identical product.” So it will match the printed ad that the customer doesn’t have to show? As one Wal-Mart general manager said, “It’s contradicting itself. In our own statement. Lovely.”
Wal-Mart said it will now match “buy one, get one free ads with a specified price” and loyalty card advertised prices. And its exclusions—beyond Web pricing (even walmart.com prices can’t be matched) and stores that are not considered local—include items that require a separate purchase to get the ad price, items requiring a purchase to get a gift card, going out of business/closeout prices, percentage discounts (Wal-Mart’s example: “All mascara, 40 percent off”) and private-label price promotions. Wal-Mart is also excluding “misprinted ad prices.”
Beyond those exceptions, though, is a very large area for interpretation.
-Marc
April 14th, 2011 at 9:40 am
Walmart and many other retailers are not willing to match their own eCommerce sites prices. Which is surprising and beyond reason? On the same Walmart site I can order a lower price item Site 2 Store and it will be deliverted to me at the Store for pick up at a considerable expense to Walmart, but Walmart will not match the online price !!!
April 14th, 2011 at 9:55 am
It seems there are several areas in which WalMart is contradicting itself. I wonder how many ‘what if’s’ were thought through before they rolled out this program. I am not sure the old way of customers bringing in advertisements or print outs from online websites and presenting at point of purchase was ‘broken’. Now store associates are being asked to educate themselves on the competitive landscape in order to tell the customer when there is a lower priced item being advertised elsewhere and adjust accordingly. I am assuming since the product is on the conveyor belt and they are purchasing, that they are going to purchase at the advertised price. Does it make WalMart better to adjust the price? And why dont they adjust prices at a store level when they see what competitors are doing? This would reduce repetitive actions at the register. Also, the article mentions that people can show offers to the cashier via their mobile phone. Am I missing something or did WalMart not say Print circulars only? Opening up the competitive landscape to any online deal is a huge can if the customers are not responsible for producing evidence of the pricing. Can I say I saw Pantene on sale on the Target website for $4 at the Walmart register without a print-out? Or do I need to pull it up on my mobile phone? What if I dont have a smartphone? Seems like a lot of pieces missing or need to be worked out still.
April 14th, 2011 at 12:46 pm
Walmart has no interest in creating a ‘fair’ pricematch policy, oven in creating a workable policy. They are only interested in creating an advertisable policy.
“Walmart will match the price of any local competitor’s printed ad for an identical product.” is likewise a joke. What with private labeling, and exclusive model practices (Model ABC123-W only available at Walmart)the odds are very much stacked against the consumer, and Walmart knows it.
April 14th, 2011 at 1:35 pm
Most curious about how this will affect the checkout and loss prevention processes. Will the cashier require a price over-ride for each matching price? Will the store manager have to authorize each? This will slow the line speed significantly. Or will the cashier be given authority and some system over-ride price button? And how will this price substitution/over-ride affect processes and algorithms around LP?
April 14th, 2011 at 3:52 pm
Provided it has not changed, associated were authorized to price match before themselves within a percentage of the WM price. Past that percentage required a CSM (not a store manager… aka “a 100”). There SHOULD be a couple of those around the checkouts already. Of course, whether your cashier actually knows how to do it or not is another story altogether.
April 14th, 2011 at 4:21 pm
The crux of this may be the words “identical product”. Several years ago, there was a vendor selling a product to both Walmart and Costco. Walmart appeared to have the lower price on the same size bottle that was being sold by both retailers. Costco stopped carrying the vendor all together when it was discovered that Walmart’s product was 4 ounces shy of the bottle’s actual capacity. Although the bottle at Walmart was labeled with the actual fluid ounces, the size of the bottle led the consumer to believe that the Walmart price was lower on the “identical product” when it actually contained 12 less product than the Costco product. I dare say this is not the only instance of this type of deceptive packaging and I highly doubt that Walmart was deceived by the vendor.
April 14th, 2011 at 9:06 pm
A lot of strong comments but I wonder how many of the commentators have a price match policy in their business or ever tried to design one. It really is harder than you think.
April 15th, 2011 at 4:55 am
WalMart became more expensive than the competition by dropping their generics, not by raising the price on Pantene.
I assume they’ll compete for the low-price crown by bringing back Equate et al. and that this “match any price” business is PR and a means of getting shoppers back in the WalMart stores. Otherwise, they’re toast.
Then again, this is the company that brilliantly went upscale in the teeth of the Great Recession.