Last year Walmart launched an aggressive promotional campaign that claimed it had better prices than some of its competitors. This campaign was launched last spring in 31 U.S. cities in an effort to regain market share and its reputation as the low price leader. The ads generated a 1.2% boost in same store sales. Walmart states that because of the reality show style of filming, the ads can be filmed on Tuesday and launched on Thursday delivering powerful, current, and targeted messages.
Walmart boldly named these retailers in its advertisements, including: Toys R Us, Best Buy, and several regional supermarket chains. These retailers are outraged and many are claiming that Walmart ads cite inaccurate prices or are comparing different products with different specifications. Walmart, however, is standing behind their ads claiming, “We are confident on the legal, ethical, and methodological standards associated with our price comparison ads.”
Best Buy is suffering because of Walmart’s ads. During the holidays, a Walmart ad claimed that a Dell laptop cost an additional $251 at Best Buy. Best Buy says that it was comparing two completely different laptops and that Walmart was “basically comparing a Lexus to a Toyota.” Best Buy also offers price matching. Walmart’s promotional deal on the iPhone 5 cost Best Buy serious revenue when Walmart first launched its $150 iPhone 5 campaign.
Toys R Us is seeking legal repercussions for Walmart’s advertising citing inaccurate prices on toy kitchens, dolls, and electric scooters. Publix, a southeastern supermarket chain, has begun running ads with taglines that read, “Walmart doesn’t always the lowest price.” Pick ‘n Dave, a Midwestern supermarket chain is targeting Walmart with ads that state, “If you’d rather feed your family good food made fresh instead of just cheap food, there’s no comparison to Pick ‘n Save.”
Retail analysts suggest that a pricing war is underway and that Walmart is desperately trying to get back the pricing discipline and reputation it was once famous for.
1. What is Walmart doing to irritate its competitors?
2. Are Walmart’s actions defensible from a legal or ethical perspective?
SOURCE: Ann Zimmerman and Shelly Banjo, Wall Street Journal, January 3, 2013