Business Coaching

Wal-Mart might be raising the low prices it's known for.

When people think of Wal-Mart, they think a lot of things, not all of them good. But one of the first associations people have with Wal-Mart is low prices.

Since its inception, Wal-Mart has been the ultimate discount business. They’ve leveraged their huge size and corporate power into low prices that they’ve passed on to customers, often at the expense of local businesses.

But it seems that Wal-Mart’s model is quietly, but quickly, changing. This summer, over just the last six weeks, Wal-Mart has raised its prices an average of 6%. Some of that can be attributed to the increase in the price of raw materials and oil, but the increase in prices seems to go farther than overhead costs.

Inflation may play a factor as the items that Wal-Mart is best known for, food and low-priced goods may be in an inflationary pocket, while bigger ticket items like electronics and furniture are in a deflationary mode.

Again, this may have led to the price increase to a certain extent, but a bigger factor may be a shift in Wal-Mart’s leadership. Over the last few months some in leadership positions, including the Chief Merchant for Wal-Mart’s U.S. Division, have stepped down.

Since the new guard has taken over, prices have gone up, while prices at virtually all of Wal-Mart’s competitors have stayed the same or, in some cases, even gone down.

Despite the price shift, Wal-Mart is still far more cost-effective than most supermarkets for consumers. But that advantage is fading. In June Wal-Mart was about 16% cheaper than the average supermarket, while today Wal-Mart is just over 10% cheaper.

This should be good news for small businesses that compete with Wal-Mart for customers. Like with any discount business, once Wal-Mart’s prices are no longer cheaper, they’ve lost their advantage.

Why do people shop at Wal-Mart? It isn’t convenience or customer service, it’s the price.

What can your business do to alleviate that price advantage and win customers back from Wal-Mart?

One Response to “Could Wal-Mart’s Price Increase Help You?”

1. Geld Schnell says:

   May 25, 2011 at 2:45 pm

   For rest and shelter of the night,