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Now Featured on Wal-Mart’s Website: Higher Prices

13 November 2017

From The Wall Street Journal:

Wal-Mart Stores Inc. wants to charge more to buy some products online than in stores, part of the company’s efforts to boost profits and drive store traffic as it competes with Amazon.com Inc.

The world’s biggest retailer has quietly raised prices for some food and household items sold on its U.S. website, including boxes of Kraft Macaroni & Cheese, Colgate toothbrushes and bags of Purina dog food, according to people familiar with the matter and comparisons between online and in-store prices.

Some big-box retailers charge more for online purchases, including Costco Wholesale Corp. , but the move is unusual for Wal-Mart, which has long honed an “everyday low price” message and has worked to keep online prices at least as low as shoppers find in its 4,700 U.S. stores.

. . . .

In some cases, product listings on walmart.com show an “online” and “in the store” price. Often the online price matches Amazon.

“We always work to offer the best price online relative to other sites,” a Wal-Mart spokeswoman said. “It simply costs less to sell some items in stores. Customers can access those store prices online when they choose to pick up the item in store.”

. . . .

The higher online prices are part of Wal-Mart’s efforts to nudge more customers into stores as well as raise its e-commerce margins. Wal-Mart is investing billions to boost e-commerce sales, which rose 60% in the U.S. in the most recent quarter, but some shareholders worry the effort could drag on profits.

Marc Lore, head of Wal-Mart’s U.S. e-commerce unit, told investors in October that “this year should be the largest loss in e-commerce, and we’ll see slight improvement next year.”

. . . .

For inexpensive items, “there’s no cheaper way to get these products to consumers than have them come in the store and pick it off the shelf themselves,” Mr. Lore said at last month’s investor conference. He said he hopes shoppers will come to stores for the best price and place larger orders online to offset the cost of shipment.

Link to the rest at The Wall Street Journal

PG always becomes a bit uneasy when a large organization talks of “driving” its customers here or there to increase profits.

This “strategy” assumes a degree of control over customer behavior that can disappear very quickly. It can also backfire if customers feel they’re being manipulated.

PG never assumes that others will have the same attitudes as he does, but dealing with Amazon (or a good ecommerce site from Walmart or somebody else) is almost always better than going to a Walmart store.

When Walmart founder Sam Walton (“Mr. Sam”) was alive, he was insistently obsessive about both low prices every day and store cleanliness. And he staffed his stores accordingly.

Mr. Sam has been in his grave for awhile and Walmart has changed.

From The New York Times:

Walmart, the nation’s largest retailer and grocer, has cut so many employees that it no longer has enough workers to stock its shelves properly, according to some employees and industry analysts. Internal notes from a March meeting of top Walmart managers show the company grappling with low customer confidence in its produce and poor quality. “Lose Trust,” reads one note, “Don’t have items they are looking for — can’t find it.”

. . . .

“In its larger supercenter stores, Walmart can’t keep the shelves stocked, and that is driving customers away,” said Terrie Ellerbee, associate editor at the grocery industry publication The Shelby Report, in an e-mail.

She traced the problem to 2010, after Walmart reduced the range of merchandise it carried in an attempt to make stores less cluttered. Customers did not like the change, and Walmart added merchandise back, but with declining sales then, it did not add back employees, she said. “Without enough labor hours to get those items back, not to mention to do routine stocking, shelves were left bare,” Ms. Ellerbee said.

Link to the rest at The New York Times (Article from 2013, but from PG’s experience, nothing has changed since then.)

Amazon continues to make everybody crazy.

Amazon

21 Comments to “Now Featured on Wal-Mart’s Website: Higher Prices”

  1. Just what customers want, higher prices. Just like Traditional Publishers. How are their businesses doing?

    Sigh.

  2. I guess that explains why most Wal-Marts have a dozen checkout lanes but only two of them are staffed no matter how busy it is. Or at least that’s how it was when I last visited one, about four years ago.

    • Go in late at night and there are no checkout lanes open at all. I left two full buggies one night when none of the operators could be arsed to come over and run a register. They stood in their little cluster staring at me, then silently watched me walk out of the store. Sam Walton was probably spinning in his grave.

      For all the shortage of register operators, there always seem to be plenty of “sales associates” wandering around doing nothing in particular… whatever their problem is, it’s a policy decision since they’re definitely not short of manpower.

  3. That, and Wal-Mart’s web site is browser-dependent, horribly slow, sprawls to require a widescreen monitor if you don’t want to slide left and right to look at a page, infuriatingly slow, the search function is useless, hello is the server down?, and the results can often be more than half “discontinued” or “out of stock.”

    And then after spiking your blood pressure by hammering at the site for twenty minutes, you’ll find items that you can order, but can’t be shipped to your house or to any of three local stores. (as when I tried to buy a set of tires earlier this year) Funny, Tire Rack didn’t have any trouble, though they cost more.

    I used to laugh at the sears.com web site, but it worked far better than warlmart.com…

  4. Richard Hershberger

    Walmart’s initial advantage was as an early adopter of computer inventory management. By the late 1980s each store had a satellite link, with its computer communicating with the central computer in Bentonville. This was pretty cutting edge at the time. This is why Walmart could undercut everyone else’s prices while still making a profit.

    These days are long past. Every serious player has similar tech in the back office. Walmart has a strong legacy advantage, but no secret sauce anyone else doesn’t. In particular, Walmart has shown no ability to successfully implement an effective web strategy. Perhaps living in Bentonville doesn’t hold much attraction to top tech talent.

    Then Walmart started putting the squeeze on suppliers. One way this could play out is for a respected manufacturer to make a cheaper version for Walmart. Essentially, Walmart sells self-pirated knock-offs. This is a big reason I don’t go to Walmart for anything with moving parts. I don’t know what is inside the casing, even with a name brand.

    By the late 1990s Walmart began reducing labor costs. In other words, cutting hours. Store managers were evaluated on their ability to keep a store functioning with minimal payroll. The modern sad state of affairs is the natural progression of twenty years of this strategy.

    It also has been years since you could assume that Walmart had the lowest prices, even apart from quality issues. They still have that image, but this is part of their legacy. It would be rare to find their prices grossly higher than the competition’s, but if you really want the lowest price you have to check.

    • In my town, if you take a picture of an item in Walmart with the price and show it to another merchant, that merchant will match the price.

    • Then Walmart started putting the squeeze on suppliers. One way this could play out is for a respected manufacturer to make a cheaper version for Walmart. Essentially, Walmart sells self-pirated knock-offs. This is a big reason I don’t go to Walmart for anything with moving parts. I don’t know what is inside the casing, even with a name brand.

      At one time I worked for a Walmart supplier and I can verify that this is absolutely true. I also stopped buying from them when I learned about this practice. Plus sitting in management meetings when they had their Made in USA campaign, splitting hairs over what the exact legal requirements were (i.e., how little could we get away with) in order to put the Made in USA tag on a product.

  5. All the above and stuff well past its ‘best by’ dates, returns with broken/missing parts put back on the shelves and sold as ‘new’ …

    Yeah, my last time there made me think very hard about going over to H.E.B. for the meats and ice cream and letting Amazon deliver the rest …

  6. its interesting, Amazon is no longer the lowest price on many items. I have to double check, for actually some of what we wanted to purchase there is far higher

    i heard there was an app that can price check various, but have no idea what it’s name is. All I know is that prob trusting’ any seller/ reseller nowadays to maintain lowest price, just needs cross check.

  7. Walmart online often beats Amazon on tool prices.

    • Normally not the same tools from what I’ve seen …

      • Dremel Ultra saw: $129 vs $103.

        • Check the SKU numbers, many venders sell a ‘cheaper made’ model at Walmart, which is why other places can’t/won’t price match – because that lookalike isn’t actually the same item.

          • Numbers are the same. Same number at Amazon, Amazon vendors, Walmart, Home Depot, and Lowes. I was looking for the best price, and wanted to be sure numbers were the same, and nobody was selling the Max Saw as an Ultra Saw.

            Manufacturers do make different models for different big box stores, and it’s something to be careful of. The product name is the same, but the number is different, and the quality can vary. That’s one way the store gets to claim nobody is underselling them. Nobody can because nobody else has that model.

            So, in all comparisons, it’s important to check the numbers. And I highly recommend the saw.

  8. We were in a super Walmart recently that was really busy. The store manager had been in the back, and came out to find the 2 lines with checkers were long.

    He immediately pulled people from stocking (or whatever), and opened up 5 more registers. Told his assistant manager that he didn’t ever want to see that (so many people waiting) again. “Always open more registers!”

    He also cashiered, to get customers taken care of.

    Bet he doesn’t last long. Corporations don’t treat their store managers any better than they do the humble clerks. Speaking from experience here. 😉

    • Richard Hershberger

      When I worked in a store back in the early 1990s the way it worked was the floor people all had tasks assigned to them, and would get dinged if they didn’t accomplish those tasks by the end of the day. Spending half the day on a register was not an excuse. In other words, we were simultaneously commanded to perform a task and forbidden from doing it. This dynamic ran on the assistant manager level, too. This is why everyone let the lines get so long. The dynamic works on the store manager level, but the district manager isn’t physically present, so it is somewhat diluted. And if the distract manager were present, those lines would make him go ballistic. But on the lower level, those tasks need to get done, while customers not coming back due to long lines is a distant abstraction.

  9. This looks to me like an adaptation of what the Big-Pubs have done to counteract the e-Books. Price the eBooks high so customers are inclined to buy paper books where Big-Pubs have control. Question is will Walmart drive customers to their stores or Amazon.com?

    • I had to slog over to the big Walmart to get something today and they didn’t have it. A typical household item. Something that doesn’t expire. Out of stock. And I ran into another customer looking for the same item.

      Next time I’m going to save time and order it from Amazon.

  10. I suspect Mr Sam is doing a few rotational maneuvers these days.

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