This story is fascinating to me. According to Retail Wire, Walmart is asking its vendors to fund its Savings Catcher app, which calculates the difference between Walmart’s selling price and a competitor’ sale price and refunds it to the shopper:
While this particular report would not be unusual in most circumstances, it seems somewhat curious coming on the heels of other reports saying that the retailer has instructed vendors to offer net pricing and forego the trade promotion deals that suppliers use to drive brand sales.
The City Wire has additional details:
Winning on price has been one of the major mantras for Wal-Mart Stores CEO Doug McMillon this year who told suppliers at the Year Beginning Meeting that Everyday Low Price (EDLP) will be the standard for deals made in the future. He said buyers would be asking for supplier’s best prices and staying away from promotional pricing agendas as a rule noting that EDLP is crucial to winning the trust of shoppers over time.
The retail giant recently downsized the scope of the price match to better align with like products, namely consumer packaged brands, and staying away from bakery and produce items that don’t have consistent UPC codes. Wal-Mart also veered away from drug store competitors like Walgreens and CVS saying these store are not typically used for grocery shopping.
“At this point, suppliers have clearly gotten the memo that Wal-Mart expects Everyday Low Costs from them so any pricing games should already have been wrung out of the system or any suppliers daring to engage in high-low games are playing high-stakes roulette,” said Carol Spieckerman, CEO of newmartketbuilders in Bentonville.
In plain terms, Walmart wants a guarantee that they’re selling at the lowest possible price, and if a brand creates a lower temporary price reduction or price point with a different retailer, they effectively want to “punish” the brand for offering a better price to someone else by making them foot the bill for the difference.
As most savvy couponers know, better deals are typically found at larger supermarkets and at the drugstores — their high-low pricing structure typically rewards the consumer with lower-than-Everyday Low Price price points. One of the comments under the Retail Wire story explains this well:
Every Day Low Price has always had a problem. When there are no promotions in the market for an item, EDLP is generally selling for less. When there is a promotion from a Hi-Lo retailer, their price is generally lower than the EDLP price. The rationale is simply how the trade promotion dollars are allocated. For EDLP retailers it is the annual volume. For the Hi-Lo retailer it is the promotional quantity plus some forward buying. Walmart seem to be trying to have it both ways.
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