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Wal-Mart's new tool gives competitors prices
Sunday - 3/23/2014, 6:10am EDT
AP Retail Writer
NEW YORK (AP) -- The "Every Day Low Price" king is trying to shake up the world of pricing once again.
Wal-Mart told The Associated Press that it has rolled out an online tool that compares its prices on 80,000 food and household products -- from canned beans to dishwashing soap -- with those of its competitors. If a lower price is found elsewhere, the discounter will refund the difference to shoppers in the form a store credit.
The world's largest retailer began offering the feature, called "Savings Catcher," on its website late last month in seven big markets that include Dallas, San Diego and Atlanta. The tool compares advertised prices at retailers with physical stores, and not at online rivals like Amazon.com that also offer low prices on staples.
The move by Wal-Mart, which has a long history of undercutting competitors, could not only change the way people shop, but also how other retailers price their merchandise. After all, Americans already increasingly are searching for the lowest prices on their tablets and smartphones while in checkout aisles.
Shoppers do this so often that big retailers that include behemoths like Target and Best Buy have started offering to match the lower prices of rivals -- but only if shoppers do the research on their own. The idea behind Wal-Mart's online feature, on the other hand, is to do the legwork for customers.
Citibank launched a similar program two years ago that sends Citi credit card customers a check for the difference if Citibank finds a lower price from an online retailer. But Wal-Mart is the first traditional retailer to offer such a program, and if it's successful, others may follow.
Ken Perkins, president of retail research firm Retail Metrics LLC, said the move will "put pressure on everyone else to follow suit." But he and other industry watchers voiced concerns that the tool doesn't compare prices of online retailers.
After sending queries to some of Wal-Mart's competitors, it wasn't clear on Friday afternoon whether they planned to follow the move.
Meanwhile, Wal-Mart said it wants to see how competitors and customers respond to the program, but it doesn't have any plans to add online stores to the test.
Duncan Mac Naughton, chief merchandising and marketing officer for Wal-Mart Store Inc.'s U.S. discount division told The Associated Press that shoppers are looking for "technological answers to saving them money and time."
Wal-Mart built its business on offering lowest prices on staples such as milk, bread and laundry detergent. But Wal-Mart's "every day low price" model is under attack from dollar stores and grocery stores like Kroger in addition to the Amazons of the world. On top of that, the retailer's primarily lower-income customers continue to cut back on spending during the economic recovery.
As a result, Wal-Mart's U.S. discount division recorded its fourth consecutive quarter of declines in revenue at stores opened at least a year, a critical yardstick for measuring a retailer's health. The discounter also has seen a decline in the number of shoppers going to its stores.
Wal-Mart has had a price matching strategy for several years. In 2011, it simplified the policy by making sure workers have the advertised prices of competitors on hand at the register, eliminating the need for shoppers to bring in an ad from a rival store. But unlike rivals like Target and Best Buy, Wal-Mart's policy does not include matching prices with online rivals.
Wal-Mart said the idea for Savings Catcher was born last year during a focus group. The idea instantly resonated with the group, the retailer said, and by last summer, Wal-Mart was testing it in four markets on an invitation-only basis. Last month, the company began rolling it out to the seven markets that also include Charlotte, N.C., Huntsville, Ala., Minneapolis, and Lexington, Ky.
Here's how the tool works: A customer has to set up an account on www.walmart.com, log onto the Savings Catcher page and type in the number on their receipt.
Savings Catcher compares prices of every item on the receipt to a database of advertised prices of competitors that's provided by an undisclosed third party. The tool doesn't apply to general merchandise like clothing or electronic gadgets.
Wal-Mart prices are matched to stores based on geographic location. For example, in Atlanta, Wal-Mart compares prices to nearly 20 rivals, including Aldi, CVS, Food Lion, Target and Dollar General.
Any difference in prices is put on a Wal-Mart online gift card. Customers can accumulate savings or use the credit immediately. They can redeem in stores or online by printing out the gift card receipt.