A better version of Walmart’s pricing gambit

Articles
August 31, 2012

A better version of Walmart’s pricing gambit

Will supermarkets turn the tables on Walmart’s latest way to emphasize its low food prices?

Walmart aims to reassert its food-price leadership with the help of a new tactic in test markets. A shopper can transmit via cellphone a picture of a receipt from a competing grocer. Walmart compares these item prices against what it would cost at the nearest Walmart Supercenter, then e-mails a link to the shopper with that information within a few days. No more having to run around checking ads, claims a video on its website.

The August launch also tried to build momentum with a reported $10 gift card offer to the first 100 shoppers to submit each day.

The Lempert Report feels this is a clever program built on consumer insights.  It actually saves Walmart a lot of running around to update its competitors’ price lists.  Food shoppers that engage do it for free, perhaps because they’re caught up in the frenzy of potential savings.

Yet there are holes in this program, which either Walmart will decide to improve, or supermarkets can exploit to turn the effort back to their advantage. Here’s what we see:

The current process is cumbersome. It takes days and gives shoppers no tangible reward for their effort and energy. Even if lower prices at the supercenter could be construed as a reward, imagine how shoppers will feel if desired items are out of stock.

Better, we think, is a process that has consumers come to a store with a competitor’s receipt, insert it in a kiosk and have it read instantly. The kiosk kicks it back along with the item prices at this store, the total basket cost including any specials, and even a map showing where items can be found. 

A good place for the kiosk is near high-traffic foods, especially a display of hot specials for the day or week that quickly conveys value.

And how about inducing people to come furnish this valuable competitors’ price data by guaranteeing at least a 2% to 5% savings for taking the trip. With such an incentive and instant feedback at the in-store kiosk, we think shoppers will be motivated.