Retailers love that price-matching guarantees attract shoppers. At the same time, they hate it when customers actually try to take advantage of these policies. Walmart has had a price-matching guarantee for years, and Target and Best Buy have recently introduced their own policies on a full-time basis—which even include matching prices with online competitors such as Amazon. In some ways, it seems inevitable that stores would get on board with price matching. The rise of “showrooming” and increased transparency in the marketplace all but forces retailers to either match prices of competing stores and websites or risk losing sales to them. And yet, even as pricing is becoming more transparent, the price-matching policies employed by some retailers remain something of a mystery to shoppers. Bloomberg News recently rounded up many of the gripes consumers have regarding the price-matching policies of national retailers such as Walmart and Toys R Us. Mostly, the complaints center on how confusing and frustrating the policies can be, especially because the decisions inside stores to allow or shoot down price-match requests can seem arbitrary. “Shoppers can get confused,” Robin Sherk, a Kantar Retail analyst, told Bloomberg concerning Walmart locations. “They go to different stores and there are different policies — even in the same store, if you go to different cashiers.” (MORE: Does Kmart’s Hilarious New Ad Acknowledge That Kmart Stores Are Hopeless?) Part of the reason shoppers will find varying policies is that it’s “up to the local managers what matching they will do,” one pharmacist who has worked at several Walmarts explained. Another reason could be that the policies themselves are complicated enough to not only confound shoppers, but store employees as well. The fine print of Target’s “low price promise” is nearly 1,000 words long and includes more than a dozen exclusions such as “prices advertised only as a percent off or dollar off.” The Toys R Us Price Match Guarantee, which the National Advertising Division recently recommended be changed or discontinued because it was misleading, states that stores will match prices listed
One national restaurant chain realizes that over-burdening its employees hurts sales, as well as the company brand. Will more businesses follow its lead? In the business world, efficiency is king. The corporate quest to cut salaries and get more out of employees, thereby maximizing profits, is never-ending. At some point, however, increasing the workload on employees backfires. The burden becomes too much for workers to bear, and when employees are overwhelmed and can’t keep up with their duties, it’s just plain bad for business. Last week, Red Lobster basically admitted that it had crossed the line with the introduction of a policy aimed at increasing efficiency and lowering restaurant costs. In July 2012, the restaurant chain, owned by Orlando-based Darden Restaurants, eliminated the busboy position, demoted many waiters to lower-paid status as “service assistants,” and forced the remaining full-fledged servers to increase the number of tables they handled from three to four. At the time, Red Lobster said that the changes were being made after testing showed that diners and restaurant employees alike approved of the new policies. An Orlando Sentinel story published at the time of the switch offered some other perspectives: “We’re going to be completely worn out,” said Bob Meehan, a longtime server at Red Lobster in Lake Worth. “It’s definitely going to hurt service.” Chris Muller, dean of Boston University’s hospitality school, said worker morale will likely suffer. “If you don’t like the people you’re working with and for … it’s going to show,” he said. (MORE: Why Restaurants Have Been Holding Back on Hiking Menu Prices) Lo and behold, it appears as if Red Lobster is now acknowledging that these critics may have been on to something. Less than a year after the four-table policy was launched, the company announced it is reversing the decision, and waitstaff will go back to serving three tables at a time. A Red Lobster spokesperson told the Orlando Sentinel that while some customers liked the four-tables policy, once it was introduced around the country, “far more folks told us
In just over a week, Kmart’s 30-second “Ship My Pants” spot — go ahead, say it quickly — has received close to 13 million views online. The viral hit should give the struggling retailer some much-needed buzz. It might also call attention to why some shoppers stopped going to Kmart. Let’s be honest: Kmart isn’t cool. In the pantheon of big-box general merchandise retailers, Walmart is the 600-pound gorilla, inexorable in its pursuit of efficiency and cheap prices. Target is sort of the hip one. And Kmart, well, it’s just kind of there, right? If you associate the Kmart brand with anything these days, it’s a kind of Martha Stewart-flavored aspirational respectability, or perhaps layaway, or bankruptcy court. That’s why the retailer’s irreverent “Ship My Pants” ad, released last week, is so surprising. Not because of the faux-scatological content per se — though that did raise a few eyebrows – but because this somewhat edgy and definitely funny ad came from such a tired snooze of a retail brand. (MORE: How Far Can the Mighty Apple Fall?) The commercial highlights the store’s Ship to Home service, which Kmart launched a year ago, offering customers free delivery on any item they can’t find in stores. Andrew Stein, Kmart’s vice president and chief marketing officer, says the company wasn’t trying to make a viral ad. The goal was to just create a funny, compelling commercial that promoted the service. About a month ago, the “Ship My Pants” ad ran in a town hall meeting of Kmart employees. Stein says everyone loved it. “The outpouring of affection, the goodwill and the laughter that we got internally told us we really had something here,” he says. The video had been uploaded to Stein’s personal YouTube page, and the only way to view it was through the specific url, which was getting passed around from employee to employee following the town hall. The next morning, Stein discovered the video had been viewed 2,500 times on his page. Since then, it’s had about 13 million views on YouTube and has
Walmart doesn’t make anything. But the giant retailer could play a part in the manufacturing rebound that is taking place in the U.S. with its promise to buy $50 billion more U.S. made goods over the next decade for its Walmart and Sam’s Club stores. It’s a bit ironic, given Walmart’s vast global sourcing organization. But the same forces that are making the U.S. a more hospitable place for manufacturing —higher shipping costs and wage rates overseas among them—have prompted the company to reevaluate its sourcing on a variety of products. “This is a commitment around manufacturing and more economic renewal. We see it as a critical issue for us in the American economy,” says Duncan Mac Naughton chief merchandising and marketing officer for Walmart U.S. What Walmart sees is a way to lower costs while smoothing its supply cycle by looking more broadly at its distribution system. Although the company may be able to buy an item cheaper from China, the price it pays per piece doesn’t always reflect what it spends to get the product to the shelves. “When we buy from overseas, we may buy more than we need to fill the container,” says Mac Naughton. “We’re looking at carrying costs through the system in addition to landed costs.” (Walmart has recently been criticized for being out of stock on items, due to a lack of store employees, but the company says its in-stock position is at record levels and that it hasn’t cut employee hours.) (COVER STORY: Made in the USA) Walmart is also hitting some unexpected supply snags as local demand increases in the developing countries where it buys goods. Recently, it found itself short of memory foam for mattress toppers and had to add a U.S. supplier, Sleep Studio, to augment its foreign source. That need to increase capacity can only increase as the middle class grows in India, China and elsewhere. The company will still likely rely on foreign suppliers for those products, such as cut-and-sew garments, that have a very high labor input.
In Walmart’s culture, one of the company’s central missions is to be an agent for its customers. That is, discover what the customers want or need and provide same. The last part of that mission is getting the goods onto store shelves. And according to reports in Bloomberg News, the New York Times and elsewhere, Walmart has cut employee hours so deeply that it doesn’t have enough associates on hand to get stuff from back-of-the-store staging areas to the shelves. It is creating what in retailing is known as out of stocks—gaps in the shelves where products should be but aren’t. Obviously, stuff that isn’t there can’t be sold. A number of accounts quote shoppers as leaving Walmarts empty handed and heading for competitors. Walmart says there is no problem, bar the occasional stockout here and there—hard to avoid when you are running 4,500 stores. The company says it has a 90% to 95% in-stock level. But there is no debating that Walmart cut its operating costs in the past year. According to its most recent annual report, Walmart’s U.S. stores grew operating income faster than sales during fiscal 2013, reducing operating expenses by 27 basis points over the prior year. That means Walmart took $7.4 billion out of its cost structure. Some of that is labor; the question is whether service has suffered as a result. (MORE: Hey Walmart, It’s Hard to Make Sales When Store Shelves Are Empty) Walmart is supposed to have the most sophisticated supply chain management system in the industry. Along with its biggest vendors, such as Procter & Gamble, it has been an early and powerful practitioner of automated replenishment. As goods are purchased nationwide, the computers in Bentonville automatically spew resupply orders. Tons of programming muscle has gone into making sure everything from Pampers to potatoes are delivered to stores with incredible efficiency. Even the trucks are programmed to take the most efficient routes, so as to waste neither time nor fuel. And then all of it is unloaded into those back rooms at
Target’s first flyers will arrive at households across Ontario Thursday, adding fuel to an already blazing marketplace of consumers using print or digital discount circulars as a key pillar of their household savings strategy.
Pricing has become a particularly sensitive issue for the mass retail chain in Canada, as many shoppers were surprised Target would not offer prices on par with prices in its own U.S. stores. Target Canada president Tony Fisher said last week that the retail chain would price items in league with its rivals’ market prices in Canada.
And price-matching promises between chains on identical items can add up to serious savings for a family with school-aged children — the very demographic Target, Loblaws and Walmart is trying to court.
“We are well aware that the flyer is an important tool for how Canadians shop,” said Lisa Gibson, Target Canada spokeswoman. For the inaugural flyer in this country, “we wanted to drive home our focus on pricing and design and our focus on community,” she said.
“We competitive shop about 20,000 items on a weekly basis, and our prices will fluctuate based on [market competition], but we offer a price match guarantee for that further confidence.”
The 28-page flyer features comparatively large pictures of products and graphic arts pages touting the chain’s LEED-certified retail stores and charity efforts.
Dayna Callaway, a mother of six in greater Toronto, estimates flyer shopping has shaved $300 to $400 a week off of her grocery shopping trip, which includes purchases on household items and toiletries.
“We used to spend about $1,000 per week and now I am hard-pressed to spend more than $600 on groceries and household items and toiletries.”
In January a widespread survey of consumer habits by Toronto-based agency BrandSpark found that 90% of Canadians read printed flyers regularly, and 26% regularly read digital store flyers. Among those who read both formats, 71% said they preferred printed flyers.
One way that Walmart keeps prices low is with minimal staffing levels in stores. But shoppers and workers alike are complaining that Walmart is understaffed, and the results include annoyingly long checkout lines and shelves that are barren—because there’s no one available to restock them. A new Bloomberg News article lays out the argument that Walmart stores just don’t have enough employees on the job: In the past five years, the world’s largest retailer added 455 U.S. Wal-Mart stores, a 13 percent increase, according to filings and the company’s website. In the same period, its total U.S. workforce, which includes Sam’s Club employees, dropped by about 20,000, or 1.4 percent. It’s not surprising that the story features plenty of anecdotal evidence from customers relating their frustrating experiences dealing with Walmart workers, who seem overburdened and/or inept. “You wait 20, 25 minutes for someone to help you, then the person was not trained on mixing paint,” said one customer, a father of six from California who was trying to buy wall paint. “It was like, you have to help them help you.” (MORE: Is Walmart’s Buy American/Hire Veterans Initiative Anything More Than a PR Stunt?) What may be surprising, however, is that Walmart employees feel strongly enough about understaffing that they’re talking to the press about it. “The merchandise is in the store, it just can’t make the jump from the shelf in the back to the one in the front,” a meat and dairy stocker who works at a Walmart in Erie, Pa., said. “There’s not the people to do it.” Other workers say that stores miss out on sales because there aren’t enough employees to answer customer questions and get items out from behind jewelry counters. Walmart workers also claim that store managers get bonuses partly by keeping employee payrolls down. The story comes one month after another Bloomberg News piece featured the minutes of a Walmart meeting, in which executives reportedly said stores were “getting worse” at restocking shelves, and that “self-inflicted wounds” represented the “biggest risk” to
Awkward! The National Retail Federation, which is dominated by traditional brick-and-mortar-based stores, just gave its top award to the guy who has been undermining their businesses for years. By the holiday shopping season of 2011, it was clear that Amazon.com could not remotely still be considered a plucky upstart in the retail world. The introduction of an “evil” PriceCheck app promotion—in which Amazon openly attempted to steal business away from competitors—demonstrated that the world’s largest online retailer was not just a player, but arguably the industry’s leading aggressor. Since then, traditional retailers have found it necessary to fight back against Amazon, by refusing to sell the Amazon Kindle, for instance, and by matching Amazon’s prices on identical merchandise. Here’s some insight as to how Amazon is perceived (hated?) within the world of retail, courtesy of the Seattle Times: “There’s always an industry bad guy, and right now it’s Amazon,” said Mary Ann Odegaard, a marketing professor who directs the retail management program at the University of Washington’s Bothell campus. “They’re taking sales other companies want, and they’re competing on a different basis.” (MORE: Amazon’s Low Prices Get Targeted: Target’s Online Price-Matching Policy Becomes Permanent) Amazon’s low prices have cut into the profits of brick-and-mortar competitors. It is almost singlehandedly responsible for the rise of “showrooming,” in which shoppers scope out goods in physical stores before ultimately purchasing them online for less. As the Seattle Times story put it, “no company has done more in the past decade to disrupt the traditional retail establishment than Amazon.” And yet, the traditional retail establishment just handed Amazon honcho Jeff Bezos its highest award. In December, the National Retail Federation announced Bezos would be given the Gold Medal Award, essentially naming Amazon as the top retailer of 2012. “The Gold Medal is the most coveted award in retail, given to an individual who has served the industry with distinction and achieved a national reputation for excellence,” the NRF explained. “The recipient has also displayed creative genius and inspirational leadership and has won the respect