Walmart's new tool compares competitors' prices
NEW YORK — The “Every Day Low Price” king is trying to shake up the world of pricing once again.
Walmart 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 Walmart, 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 such as 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 Walmart’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 Walmart 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.
Walmart 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.”
Walmart built its business on offering lowest prices on staples such as milk, bread and laundry detergent. But Walmart’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, Walmart’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.
Walmart 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, Walmart’s policy does not include matching prices with online rivals.
Walmart 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.
Walmart prices are matched to stores based on geographic location. For example, in Atlanta, Walmart compares prices to nearly 20 rivals, including Aldi, CVS, Food Lion, Target and Dollar General.
Any difference in prices is put on a Walmart 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.
Walmart’s Mac Naughton said preliminary data shows that in the markets that have the Savings Catcher, shoppers are putting more items in their basket and the checkout lines are faster because people don’t feel like they have to pull out their smartphones or circular ads to check prices. The company declined to say when the program could be expanded nationally.
Anne Jurchak was part of Walmart’s focus group. She said she’s been getting back $5 to $7 on her weekly trips to Walmart in which she typically spends $200 to $250. Jurchak has used those savings to buy holiday stocking stuffers and a case for her e-reader.
As a part-time marriage counselor and mother of two sons, Jurchak, 41, said she’s never had time to take advantage of price matching.
“They’re doing the work for me,” said Jurchak, who lives in Belmont, N.C. “The only thing they’re not doing is putting the groceries away.”