Source: Facebook/LEX 18 News
Walmart gets the attention of shoppers with egg-ceptional prices
Walmart is known for its everyday low prices on products across the store, but a recent offer of a carton of 18 eggs for $2 at a store in Kentucky raises questions about how this particular location was able to offer a price so far below that which chains are paying for a dozen eggs wholesale.
Newsweek reports that a store in Harrodsburg, KY, was selling the eggs (the size was not specified in the reporting) well below the $2.16 to $2.18 wholesale price currently being paid by retailers in the Midwest for a dozen medium-sized eggs delivered to the store, based on data from the U.S. Department of Agriculture. It’s also lower than the $2.11 to $2.14 that most pay when the same size eggs go to a warehouse for distribution to stores.
A search of the local area around Harrodsburg found that Walmart goes up against Aldi, Kroger, C&T Food Market, Save A Lot and La Hacienda.
Reports of the low price had some on social media questioning whether the eggs were near their expiration dates or asking why other retailers were charging so much more, according to Newsweek’s reporting.
A Walmart company spokesperson said that the retailer was able to take advantage of a deal to lower its price and “quickly pass on those savings” to its customers.
A carton of 18 Great Value Large White Eggs this morning was listed at $4.20 on the Walmart site for a local store.
The price of eggs have skyrocketed due to an outbreak of the avian flu that has caused poultry farmers to cull millions of birds from the nation’s flocks. The average price nationally for a dozen grade A eggs was $4.82 in January, up from $1.93 the year before, according to the U.S. Bureau of Labor Statistics. The higher prices paid by consumers in recent months have been met with charges of gouging.
Walmart has gained most of the headline attention when it comes to public commitments made by retailers to push back on price hikes in grocery. Doug McMillon, Walmart CEO, in December told CNBC that center store categories posed the biggest challenge in getting prices under control. The retailer has recently warned major consumer packaged goods companies against further increases, Reuters reports.
- Walmart’s $2 Eggs Spark Concerns, Questions – Newsweek
- Egg Market News Report – U.S. Department of Agriculture
- Databases, Tables & Calculators by Subject – U.S. Bureau of Labor Statistics
- Walmart pushes back as major product suppliers ask for higher prices – Reuters
- Should grocers be demanding price decreases from suppliers? – RetailWire
- Where on the grocery store shelves Walmart CEO says inflation will remain stubborn – CNBC
- Consumers get some relief as inflation eases – RetailWire
Discussion Questions
DISCUSSION QUESTIONS: How much are Walmart and other large retailers able to influence pricing on commodities such as eggs? What is the likely story behind Walmart’s 18 eggs for $2 sold at its Harrodsburg, KY store?
Poll
Loading …BrainTrust
Susan O'Neal
General Manager, Promo Intel & Insights, Numerator
Shep Hyken
Chief Amazement Officer, Shepard Presentations, LLC
This appears to be nothing more than loss-leading pricing by Walmart. Given Walmart’s size, they can influence pricing and lead the market. Selecting a high profile category like eggs gives the loss-leading strategy even more attention. I don’t think there’s anything new here.
This is a promotional play, a one-and-done to drive sales and showcase Walmart’s influence when it comes to pricing. The normal price for eggs is at least double this price anywhere in the stores I’ve shopped, and in most locations around the country. I do think Walmart can play an instrumental role in pushing back against CPGs’ price hikes, which could help other grocers as well.
This a loss leader for them and if anyone decides to compete with them it will be a race to the bottom and Walmart will win. It drives traffic and hopefully the cost will be made up for in the basket mix.
Maybe Walmart landed a great deal on eggs, maybe they decided to use it as a loss leader to win back shoppers who are trading down or out to dollar stores. Either way, brilliant, opportunistic tactic by the Harrodsburg, KY store!
I wouldn’t bet against Mark Ryski on the likely story behind Walmart’s pricing. Our problem is that we don’t know the underlying “true” costs of the supply chain impacts on pricing so if we assume the supply chain impact is real, then someone has to eat the loss to drop pricing and that brings us back to Mark’s observation.
We can all speculate why they priced the eggs at an egg-ceptional price in this one store. Indeed what they got was considerable national media attention with a low-price message.
Loss-leaders have long been a competitive tactic in grocery, and Walmart has the power to subsidize these items and to influence suppliers for pricing concessions.
What does a one-off deal mean to shoppers nationwide when only a limited group can take advantage? Essentially nothing.
What does a one-off deal mean to a retailer nationwide when only a limited group can take advantage? Really valuable press that money can’t buy.
Walmart can’t control the wholesale price of eggs (or any other product). They can control what they charge. Many retailers have “loss leaders” to get customers into their doors. This may be the story behind Walmart’s lower than wholesale pricing for eggs.
So wait: we’re talking about a (potential) loss leader at a single Walmart? Yes it could be a competitive response; or a typo, or an Amazon-like effort to see much publicity they can generate with minimal effort (if the latter, it sounds like it may have had decidedly mixed results) Honestly, I don’t think we’ll ever know. (And if it was a deliberate effort, I think it likely the decision was made at the store level, as I doubt HQ can fixate on individual locations).
Obviously a mega-retailer like WMT can influence prices, but as the past year has shown, “influence” isn’t the same as “dictate.”