Rivals: Walmart Plays Loose With the Truth

Discussion
Jan 07, 2013

Best Buy, Toys "R" Us and a number of regional supermarket chains have filed complaints in several states against Walmart over the accuracy of its price-comparison ads. Competitors say products aren’t always identical or available, but Walmart defends its ads as accurate. The news was first reported by The Wall Street Journal.

Best Buy reportedly complained to attorney generals in Florida, Illinois, Michigan and New Jersey. In its complaint to Florida’s attorney general, the electronics retailer claimed a Dell laptop advertised in a Walmart ad as $251 less expensive than Best Buy wasn’t the same laptop. The complaint likened the ad to "comparing a Toyota to a Lexus."

Best Buy also claimed it lost about $65,000 in profit the day Walmart’s promotion on the iPhone 5 first ran on Facebook. It matched the deal’s prices although Best Buy claimed Walmart didn’t have sufficient iPhones available.

Toys "R" Us likewise complained to attorney general offices across multiple states that Walmart was advertising out-of-stock deals and prices in Walmart’s stores were often higher than advertised ones.

In a statement, Walmart spokesman Steven Restivo said all local, state and federal rules and regulations were followed and under-stocks weren’t an issue. He added, "We know competitors don’t like it when we tell customers to compare prices and see for themselves, but we think consumers deserve every chance to find value."

Walmart began its "Market Basket Challenge" price-comparison ads against regional grocers earlier in the year to reinforce its discount reputation and extended it to a national ad blitz targeting Best Buy and Toys "R" Us during the holidays. Regional grocers had also filed complaints across multiple states, Walmart admitted.

In the grocery channel, some competitors have also responded with local campaigns. Publix has run weekly comparison ads touting, "Walmart doesn’t always have the lowest price."

One radio ad for Pick ‘n Save stated, "If you’d rather feed your family good food made fresh instead of just cheap food, there’s no comparison to Pick ‘n Save."

Market observers said it’s rare to call out competitors by name in advertisements and to take complaints to state consumer-protection regulators. The Journal article also noted that Walmart in 1994 agreed to stop comparing products that weren’t identical without highlighting the differences as part of a resolution of a legal dispute with Target.

What are pros and cons of price-comparison ads? How should stores facing price-comparison callouts respond?

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31 Comments on "Rivals: Walmart Plays Loose With the Truth"


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Doug Stephens
Guest
Doug Stephens
9 years 8 months ago

What brands will have to awaken to sooner or later is that the old school tactic of printing half-truths and exaggerations (if not outright lies) is ceasing to be effective when the consumer can validate or disprove it in a moment with the computer in their pocket. They also need to reckon with the concept that if they do walk the fine line of truth, a competitor can call them onto the carpet in front of the court of Twitter and Facebook in seconds—not to mention conventional media.

Here’s a new (old) concept in retail…TELL THE TRUTH. And if your truth isn’t compelling enough or doesn’t move enough product, don’t just lie and hope no one notices, because they will. Instead, use your energy to create a BETTER and MORE COMPETITIVE TRUTH. Don’t just say you’re better…BE better.

David Biernbaum
Guest
9 years 8 months ago

Consumers should take with a huge grain of salt any price-comparison offered by one competitor about another. Price-comparisons are often inaccurate because prices differ from location to location, deal to deal, and promotion to promotion. And in some categories, particularly with certain appliances, mattresses, and others, retailers often carry different models.

Max Goldberg
Guest
9 years 8 months ago

If you have the lowest prices, comparison ads can drive sales, as many consumers are motivated by price. At the least, these ads get consumers to pay attention to the fact that a comparison is being made.

Comparison ads can be countered by stressing selection, value, quality and customer service. Filing complaints with attorneys general may result in the ads being pulled, but they won’t lessen the damage.

Dr. Stephen Needel
Guest
9 years 8 months ago

Here in Atlanta, they are showing, in print ads, the actual receipts with item by item comparisons and telling us which stores they were comparing. Almost all the items are comparable and yes, Walmart does not always have the lowest price. However, their totals are always about 10% lower. Psychologically, this may be even better for them—it makes their low prices claim more realistic. As long as they are being transparent, I think this is great for them.

Rule #1 of counter-propaganda, going back to social psych research during WW2—never try to refute negative propaganda, which is what some of these chains seem to be trying. Instead, highlight your positives. If I were Publix, I’d be pushing all the peripheral sectors (Deli, Bakery, Meat, Seafood, etc.) where Walmart is weaker, as well as emphasizing service/experience.

David Livingston
Guest
9 years 8 months ago
When a retailer complains to attorney generals and such it shows a complete lack of class. They are simply poorly run companies that don’t have Walmart’s skill and by complaining, they are just trying to shift the blame for their failure. If I was selling iPhones and I know Walmart doesn’t have any in stock, I wouldn’t care less about their ad. That seems kind of dumb to match an ad for a store that doesn’t even have the product. Where was their market intelligence to tell them Walmart was out of stock? Good companies compete well with Walmart like Publix and Target. Target will match Walmart’s prices and take off another 5% with the RedCard. Bad companies cry like babies to the government. We all know price comparisons are flawed. The key is to be able to get customers to believe them in your favor. Walmart is making that happen. The pro is making is work, the con is if you can’t make it work for you. The best response is deeds not words.… Read more »
Paula Rosenblum
Guest
9 years 8 months ago

I guess I would say that the people these ads resonate with are likely the same ones who wait on line all day Thanksgiving to get a pseudo-deal.

When I watch the Walmart-beats-Publix ads, I know they’ve cherry-picked certain items to make the basket look bigger, but I also think a lot about PT Barnum.

I like both Publix (who I actually think has lost a step in the world of “in stock”) and Pick N Save’s response as well. You can’t ignore the ads. You have to fight back somehow as silence is taken as agreement.

Ed Rosenbaum
Guest
9 years 8 months ago

Beware fellow shoppers, the ground is shaking because the giants are angry and the fighting has begun. We have been leery of price comparison ads for years. Now the big boys want to fight over it. None the less, it will continue; and we shoppers will still be taken in by it. We, the shoppers, are the ones who need to object to the “low price ads.” Maybe the state Attorney Generals will hear us. They sure do not listen to the giants screaming foul.

Ben Ball
Guest
9 years 8 months ago

Walmart wins in this one no matter what, and that’s why competitors are complaining. Whether or not there are some technical violations (presumably unintentional or the result of changing market conditions) from time to time, what Walmart is doing is very emphatically reinforcing its “lowest prices” core positioning.

None of these complaining competitors have attempted advertised price comparisons naming Walmart that I can recall.

Dick Seesel
Guest
9 years 8 months ago

Walmart’s key competitive advantage is its perception as the low price leader. The price comparison ads are a very aggressive way to make that point. While it may or may not be accurate to claim—after the fact—that the Walmart ads are misleading, the competitors who are complaining now were probably caught flatfooted in the first place on their overall pricing.

I’m sure both sides in each of these complaints feel that they have the facts in their corner. And to justify higher prices vs. “cheap food” (in the case of Pick ‘n Save) is not a strong argument when comparing identical branded packaged groceries.

Steve Montgomery
Guest
9 years 8 months ago
When price-comparisons involve exactly the same product they can be very effective as people are always looking for the best price. If they weren’t there wouldn’t be all this concern about showrooming. The issue about fairness is that whether or not the items are the same, the perception is that they are and that is deceptive. Unfortunately we live in a sound bite world. When someone advertises, they have X1a for Y price versus a competitor who has X1a+ for more people stop reading (or listening) at X1a or even at X1. The perception is they are advertising the same item and they are not. All  selling the X1a+ can do is make sure their staff knows of the difference and explains why their product is worth more (or alternatively do that and complain to their AGs.) All the foregoing notwithstanding, price comparisons still work and will continue to work whether they item is the same or just close to being the same until retailers can create an environment that not so dependent on price… Read more »
Bill Clarke
Guest
9 years 8 months ago

The key difference between the Best Buy/Toys “R” Us ads mentioned, and the grocery-targeted ads, is how the items in the basket are selected.

In the case of Best Buy and Toys “R” Us, Walmart itself picked the products that were shown and made the price comparison itself. In the grocery ads, “real shoppers” purportedly make their purchases unprompted at their local grocery store, then the comparison is done to show how much they would have saved on those same items—items that they themselves selected—at Walmart.

So unless Walmart slipped up on a product or two—and any grocery store complainant would have to have eagle-eyed price checkers on staff scouring those receipts to even notice any slip-up—it’s unclear what the grocers’ issue might be.

The grocery-targeted ads can be “unfair” and “misleading” (and it helps when the “real shoppers” make some boneheaded purchasing decisions) but I don’t know of any instance where they’ve been proven untrue.

John Boccuzzi, Jr.
Guest
John Boccuzzi, Jr.
9 years 8 months ago

Retailers and manufacturers should focus on the following to earn a customer’s business:

  1. Be truthful
  2. Don’t try and trick customers, they have far too many tools to catch you. Plus, it breaks rule 1
  3. Compete on value (not price), service (not price), pride (not price) and community (not price)

Customers want to do business with people they trust and like. Don’t fall into the Walmart trap of low price. Fight back by providing the best value with passionate service and untouchable quality in an amazing environment. Clean stores, helpful well-paid associates, above average customer support, and offering high quality products is a good start.

“Catering to the lowest denominator will eventually bring you there.” Quote by Ira Neimark Former CEO, Bergdorf Goodman.

David Zahn
Guest
9 years 8 months ago

Doug Stephens and John Boccuzzi have it right in my opinion. I came across a quote not too long ago credited to John Powers (an Ad Executive who worked with Wanamakers Department Store):

“The first thing one must do to succeed in advertising is to have the attention of the reader. That means to be interesting. The next thing is to stick to the truth, and that means rectifying whatever is wrong in the merchant’s business. If the truth isn’t tellable, fix it so it is. That’s about all there is to it.”

I think the same can be said for retailing and merchandising. 1) Be compelling, attract attention 2) Tell the truth, highlight the unique truth about the store or shopping experience 3) If there is no compelling truth to share—create one!

Tom Cook
Guest
Tom Cook
9 years 8 months ago

Best Buy et al, in complaining to the attorneys general, remind me of children whining to mommy about something or other not being fair. The problem with having a monstrously big over-parent regulating every little thing is it encourages exactly this sort of whiny behaviour and shifts attention away from actually trying to improve ones business. Not only that, it’s predicated on and perpetuates the idea that people are mindless consumer drones completely at the mercy of advertising and utterly unable to resist hopping in their car to go buy an out-of-stock phone at Walmart just because Walmart told them to before Best Buy did. Utter nonsense.

Ed Dunn
Guest
9 years 8 months ago

I would not compete with Walmart on price-comparison as Walmart can escalate into absorbing serious loss-leads to demonstrate they are the low-price leader.

I would put Walmart on the defensive by highlighting local producers and local fish farms while pointing out Walmart ships these items from outside the country. I would also highlight the employees and show they are happier working here than the employees at Walmart.

If Walmart wants to fight on EDLP, change the parameters of the fight.

Ed Dennis
Guest
Ed Dennis
9 years 8 months ago

I love price comparison advertisement because they have the effect of lowering prices everywhere. Anytime a retailer advertises a low price, it forces most competitors to match that price and I benefit. The best response for any retailer is to do their own price comparison and post the results on their door or advertise on the radio or TV. I can’t believe that any thinking retailer cannot find ten or twenty items that they can sell below Walmart’s posted price.

Cathy Hotka
Guest
9 years 8 months ago

While these ads try to convince consumers that Walmart’s prices are cheaper than anyone else’s, savvy consumers know that isn’t always the case. I’m guessing that, in an era of $4.00 munchkin-sized cereal boxes, consumers will continue to chase bargains wherever they are.

Tony Orlando
Guest
9 years 8 months ago
Is anyone surprised by Walmart’s new comparison ad program??? They are trying to rule the world one price check at a time, and as an independent, you need to respond in a way that they simply can not do. Walmart will not match every price, as many of my customers found out. They use the closeout excuse, for not matching some of my deals, and “we don’t carry that product” jargon, so let the Buyer Beware. Walmart keeps me on my toes and keeps me focused on ways to bring in business that they can not, and will not do. I’ve said here before, to hit them in perishables, and heavy meat and deli deals, and they simply can not respond to a custom cut supermarket. In one ad I told my customers to go down to Walmart and ask the Butcher for a USDA CHOICE 2″ porterhouse steak, and than I said, “Oh by the way, they have no butchers, and stop out to see us, and we’ll take care of it for you.… Read more »
Lee Kent
Guest
9 years 8 months ago

We all do price comparisons, but when a retailer does them in an ad, this is always cause for some suspicion, at least to me. Bottom line, we have too much information at our finger tips and retailers had better be telling the truth or it will do far more damage than good.

David Slavick
Guest
David Slavick
9 years 8 months ago
Be careful what you ask for. Want to raise awareness about price and in turn lower your profit margin on goods sold? Then complain that your competition is misleading the poor uninformed consumer. State and local government aren’t interested in administering these firefights. These ads are in heavy rotation in Chicago. I know the agency and director of the spots are trying their hardest for the female shopper to look shocked and surprised when the bottom line savings difference (10 to 20% less at Walmart than Jewel or Dominick’s or Target), but really? As shared, the price buyer is no different than the clearance buyer. Who really walks back into a Walmart after seeing these comparison spots and expects to save 20% against their shopping list? Oh and by the way, did the shopper forget to redeem all eligible coupons and threshold deals offered by the traditional grocery chain for comparisons sake? This is a short burst trend that will go away. It does nothing to support the brand. It reduces the reasons to shop… Read more »
W. Frank Dell II, CMC
Guest
9 years 8 months ago

Market basket price comparison among retailers has been around for years. The problem has always been what is in the basket. Many consumers have discounted this approach based on their own buying. To name a competitor is rare. The problem here is it must be the exact same item.

Some retailers afford the store manager the authority to meet competition. So the day the advertisement hits, the competitor simply changes its price. The only real solution is the call out; the retailer showing their advertised price would not purchase the item, their facts were wrong, or the product was out-of-stock. This creates distrust, but at less cost of valuable advertising dollars.

Martin Mehalchin
Guest
Martin Mehalchin
9 years 8 months ago

Walmart is reinforcing its position as the low price leader and, in the short run, coverage of competitors complaints could just reinforce the perception in consumers’ minds and accrue to the strategy.

Very little point in other retailers trying to compete head on. I agree with other comments above that the key is to try to find points of differentiation and compete on those.

Herb Sorensen, Ph.D.
Guest
9 years 8 months ago

Price comparison is a dicey game. Several years ago we did a major study of price comparisons across a suite of retailers, on behalf of a competitor of Walmart’s. We weren’t looking at claims, but simply looking at “same” item pricing across a series of markets, by multiple stores from multiple chains.

One of several major problems, discussed here, was that IDENTICAL items often do not exist across stores, and this was especially true of Walmart. But then, in ordinary everyday commerce, the exact identity of items changes in other stores too, with “no one” taking notice. My takeaway? Item identity and pricing is an inexact science.

Robert DiPietro
Guest
9 years 8 months ago

Price drives consumer action, but those customers will evaluate other things as well. Is the store convenient or will I spend more in gas to save a buck? Can I find a parking spot, is the store clean, do I like the service, can I get in and out quickly?

Focus on your strengths and if the price is close, or on a non-comparable item…call the bluff!

Craig Sundstrom
Guest
9 years 8 months ago

This seems to be a well rehearsed morality play: Walmart plays the unimaginative bully—bragging about his size (or in this case the lack thereof), a slew of fading competitors run crying to teacher, and the clever kid in the bunch (Pick ‘n Save) finds a way to turn the controversy to his advantage. It seems like 2013 will be like 2012…and 1912…and 1912 B.C…..