Viewpoints

Wal-Mart's New Price Claim and What It Really Means

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When a company changes its advertising slogan after the previous one had a run of 19 years, something big must be afoot.

That's just what's happening at Wal-Mart. As was reported in last week's SN, Wal-Mart has changed its advertising tag line from “Always Low Prices” to “Save Money. Live Better.” The new slogan is being used in image ads intended to invoke the concept that Wal-Mart contributes to an improved way of life for consumers.

At first glance, the new ad line seems to be coming at a strange time. For the past couple of years or so, Wal-Mart has endeavored to creep its merchandise mix slightly upscale. That effort didn't catch fire. Last fiscal year, Wal-Mart chalked up its slightest same-store sales growth in the company's history. So Wal-Mart is now placing greater emphasis on its low-price roots. It seems that Wal-Mart's old ad line was better suited for the low-price approach since it unambiguously set out that offer. The new tag line is much less forceful in its appeal to cost-conscious shoppers and admits to the possibility of something else.

No doubt, then, Wal-Mart must be open to the possibility of further tweaking the merchandise mix and is using another means to convey its low-price message. Here it is: To promote the benefit of being a Wal-Mart shopper, Wal-Mart is making a broad claim about how much money can be saved. Citing research it commissioned from Global Insight, a Boston-based research concern, Wal-Mart says in a statement that “consumer expenditures over the 2004 to 2006 period translate directly into savings for consumers amounting to $287 billion in 2006. This corresponds to savings of $957 per person or $2,500 per household.”

Although a bit obscure, that statement might be taken to mean that Wal-Mart is saying that should shoppers buy goods at Wal-Mart, in a year's time they will save $957 per person or $2,500 per family — a family evidently comprising 2.6 individuals — as compared to the cost of goods bought from a competitor. However, that's much too specific to be applicable to all consumers. Instead, what Wal-Mart is claiming is far more complex than that. A reading of Global Insight's research, which is laden with academic verbiage nearly to the point of obfuscation, shows that Wal-Mart's claim is that its price initiatives dampen price inflation across the board. It's acknowledged in the research that lower prices lead to lower wage inflation too. Yet, because consumer prices are held in check to a greater degree, it's claimed that the net yield is the positive benefit of increased purchasing power.

It's highly unlikely many consumers will grasp the fact that what Wal-Mart really is saying is that its very presence rains down benefits on the entire population, and that to some extent these benefits accrue to everyone, whether they shop at Wal-Mart or not.

To Wal-Mart's credit, it provided a link to the Global Insight research in its first statement about the new ad program. It's livebetterindex.com. Wal-Mart has also inaugurated another website that features a constantly moving ticker that estimates by the second, and to the penny, how much money American consumers have saved because of Wal-Mart. It's at savemoneylivebetter.com. We'll see how all this flies.

Contributors

David Orgel

David Orgel is executive director, content & user engagement, of Supermarket News (SN) and its website, SupermarketNews.com. Orgel delivers his opinions on industry trends through a bi-weekly...

Jon Springer

Jon Springer has been writing about food, food retailers and food retailing for more than 10 years, and is in his second tour of duty with Supermarket News. His prior experience includes covering the...
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