Richard J. George, Ph.D.

Wal-Mart Rollbacks: Real or Not Really?

November 5, 2009

FROM RETAILWIRE:
The holiday season is coming up and Wal-Mart is dropping prices on key items, churning out press releases in recent weeks to announce the latest rollback designed to help consumers "Save money. Live Better." Is Wal-Mart being more aggressive with its pricing this year versus past holiday seasons or is its media machine creating an impression of more dramatic rollbacks than actually exist?      [more...]

Walmart has always used the media to communicate or confuse its competitors. It either disseminates or allows the media (public and/or trade) to discuss concepts/ideas/strategies, etc, which are contrary to what the Bentonville Giant is really planning to do. An example would be Walmart's disclosure that it intended to build a number of Marketside formats to compete with Tesco's Fresh & Easy. It got everyone's attention, including Tesco, Target, and the C-stores, but they have not added a single location.

However, in this case, the emphasis on price reductions during the holiday season appears to be genuine and appears to be aimed at reducing the number, size, and strength of competing retailers. With its ongoing SKU rationalization and CSI initiatives, Walmart is putting additional price and margin pressure on its vendors. In addition, the customer-confusing rollout of Project Impact and the delay in its private label transition has created a scenario that mandates a frontal price attack.

In the final analysis, whether the price cutting is real or imagined matters little if the consumer believes Walmart's prices are lower.