If you thought Walmart would back down after several competitors challenged its price-comparison ads – think again. Walmart is defending its commercials, and its methods.
As reported last week, Best Buy, Toys “R” Us and a number of unnamed supermarket chains have filed formal complaints with several state attorneys general (read: “Legal Challenges to the ‘Walmart Challenge’”). Documents obtained by Coupons in the News show that both Best Buy and Toys “R” Us complained to Florida’s attorney general that several Walmart commercials that ran over the holidays inaccurately portrayed their prices as compared to Walmart’s.
Now, Coupons in the News has reviewed similar documents filed with the state of Michigan – and Walmart’s official response. In letters to the state’s Consumer Protection Division, Toys “R” Us lodges similar complaints as those it filed in Florida, with somewhat stronger wording. It accuses Walmart of “cherry picking” products and prices, displaying prices that were not accurate at the time the ads ran, employing “bait and switch” tactics in promoting products for which it didn’t have sufficient stock, and engaging in “potential predatory pricing” for selling some items at well below cost.
In a letter to Walmart dated December 14th, Assistant Michigan Attorney General Kathy Fitzgerald, head of the Consumer Practices Division, asks Walmart to explain what “prevents the ads from being deceptive.”
In a response dated December 31st, Walmart launches a vigorous defense. The ads, it says, “are neither misleading nor inaccurate in any material way.” Walmart denies having insufficient stock of any products, and noted that its ads were filmed a few days before they began airing on TV. Past Walmart price-comparison ads have noted that prices were valid at the time the ad was shot, not necessarily when it began airing.
But in this case, it gets a little murky. Toys “R” Us complained that in one ad, Walmart used different sets of prices that were in effect on different dates. One ad, filmed on December 9th, featured Toys “R” Us prices that were no longer accurate when the ad began airing on December 12th. Yet, Walmart acknowledged, some of its own prices featured were also not accurate when the ad was filmed on December 9th, but instead were in place by the time the ad began airing on December 12th. At no time, it appears then, were the prices that were compared in effect at the same time.
Grocery stores, which were first targeted by the Walmart ads early last year, have complained that the price comparisons are misleading. Particularly those whose ads begin mid-week – by the time a Walmart ad shot on a Tuesday, for example, airs on a Thursday, the grocery store’s prices featured could be entirely different. Plus, as mentioned in an earlier article, the ads do not take into account stores’ coupon policies – in fact, customers featured don’t use any coupons at all.
At one point in its complaint to Michigan’s attorney general, Toys “R” Us cites a price comparison that was compiled by Jill Cataldo in May, titled “Where Walmart Gets it Wrong.” In it, she analyzes a full-page Walmart newspaper ad that features Walmart and Jewel-Osco receipts for the same items, side by side, and explains how using coupons and shopping the sales could have saved the featured “real shopper” a lot more money than Walmart claimed the customer could have saved by shopping there. In citing Cataldo’s article, Toys “R” Us says “campaigns against grocery stores have been found to be incorrect.” Yet, while Cataldo does call the ad “incredibly misleading,” she doesn’t actually call it inaccurate (though the same couldn’t be said for her test of Walmart’s automated price-comparison tool.)
Ultimately, the difference between the Toys “R” Us ads and those that target grocery stores, is that in the grocery ads, “real shoppers” purportedly make their own purchasing decisions and Walmart simply shows how its everyday low prices compare. In the Toys “R” us ads, Walmart hand-selected the products that were featured and – as some of its competitors now allege – in some cases, got it wrong. Could Walmart have overreached in expanding its ad campaign in this way?
Competitors may complain, and Walmart may face consequences if attorneys general don’t agree with its contention that its ads were not deceptive. But some say, when retailers go at it like this, the customers are the ones who win. “Those ads were good for the consumer in St. Louis,” Jeri Morris of Coupon STL tells Coupons in the News. In her city, where both Schnucks and Dierbergs were targeted in Walmart’s ads, both supermarkets subsequently “offered triple coupons a few times over the last few months, and even a couple of dates where they doubled coupons up to $1,” she says. “Customer service has gotten better also.”
And that’s just what some retail experts advise – if you can’t beat Walmart on price, beat them on service. “Customers want to do business with people they trust and like,” retail marketing expert John Boccuzzi writes on RetailWire. “Don’t fall into the Walmart trap of low price,” he advises competitors. Instead, he says, they should focus on value, service, pride and community. Otherwise, if Walmart is the one making the rules – only Walmart will ever win the Walmart Challenge.