Mozenda Insights: Does Walmart “Always” Have the Lowest Prices?
May 13, 2015
The household name for everything you could possibly need has been claiming to give its customers the lowest prices for years. From apples to automotive parts Walmart’s iconic rollback man has slashed prices nationwide. Walmart has made big strides to retain their customers too by giving them the opportunity to “price match” when their prices weren’t the lowest. In just the last year Walmart introduced the Savings Catcher which gives customers money back, even after they have already purchased their goods. These low price attempts have established Walmart as the low-price king in brick and mortar retail, but what about online sales? According to Internet Retailer, Walmart’s global eCommerce business grew 21% year over year to $12.2 billion in fiscal 2014, and they project similar growth in 2015. With these numbers, we thought it would be interesting to get a little insight into the often asked question “Does Walmart Really Have the Lowest Prices?”
Our approach was simple. We collected the prices of 100 different products every day for a month. These products spanned five different categories which we compared against four to five other competitive retailers for each category. The categories included were Home Goods, Automotive, Toys, Food and Electronics. The products selected for each category were chosen from popular items sold at Walmart and at four competing retailers including Amazon. For Amazon results, we selected the cheapest new product and did not include shipping. None of the selected products had rebates or incentives.
What we found
Our most obvious find was that Walmart simply does not always have the lowest prices. However, there are indicators showing they are making efforts to have the lowest price. For example, the most frequent difference between a Walmart food price and a Target food price was one cent. This is evidence that Walmart is tracking competitor’s prices and changing their own price by just enough to defend their “Always Low Prices” motto.
Overall Walmart had the lowest price 55 percent of the time (see the chart above). Amazon was the second most competitive having the lowest price 33 percent of the time. This would be even closer if you disregard food, a category that Amazon did very poorly in. Take Amazon out of the race altogether and Walmart jumps up to having the lowest price 88 percent of the time across all categories. Depending on the category Walmart’s performance varied. Walmart did exceptionally well in the Auto, Food, and Home Goods and not as well in Toys and Electronics where Amazon was the lowest price 52% and 57% of the time respectively. One thing to note was the brand of products chosen for comparison in the categories. Walmart often had a very comparable product that was priced lower but could not be used for this comparison study.
Walmart does not seem to react to Amazon. They do however react to other retail stores such as Target and Kmart. When a competitive retail store lowered their price below the Walmart price there was over a 50% chance that Walmart would lower their price within the next seven days. This happened on average 3.5 days after the initial price reduction. Only one time did Walmart lower their price after Amazon undercut a Walmart price which was likely a coincidence.
What this means
For those looking for the convenience of purchasing a plethora of goods online in one location, Walmart is obviously the place to go. If your goal is to find the absolute lowest price on a specific product, it may pay to do some searching, most likely on Amazon. Overall, Walmart does indeed lead the industry in lowest prices online and appears to be leveraging their reputation to gobble up market share. However, with online sales only accounting for roughly 2% of Walmart gross revenue, Walmart has a long way to go if it wants its online operation to impact its overall bottom line.