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Study Finds Wal-Mart’s Savings Claims Misleading

The National Advertising Division of the Council of Better Business Bureaus is calling on Wal-Mart to stop running a series of advertisements in which the company claims to save the consumers $2,500 a year. The Council calls the ads misleading and unsubstantiated. From the NAD’s release:

The National Advertising Division of the Council of Better Business Bureaus has recommended that Wal-Mart Stores Inc. modify or discontinue the implied advertising claim that consumers can save $2,500 annually by shopping at Wal-Mart. NAD found the express claim at issue substantiated.

In June of 2006, the Economic Policy Institute issued a report attacking the flawed methodology Global Insight used to calculate customers’ supposed savings. The report explains Global Insight’s “research” glosses over a whole host of problems the company creates, not to mention the fact that Global Insight - far from independent - was comissioned by Wal-Mart to conduct this study.

An article in today’s New York Times drives home these accusations, explaining that Wal-Mart commissioned the Global Insight study to help counter attacks on the company’s business practices. The Times article and release from the NAD make clear that this campaign was little more than a PR initiative, and based only loosely on fact.

Wal-Mart continues to use “low prices” as an excuse for everything from employee mistreatment to product safety. Consumers should refuse to accept this paltry explanation for Wal-Mart’s poor business practices, and demand better from the world’s largest retailer.

Wal-Mart Savings Ads Assailed [New York Times]

Posted by Media Team on Monday, March 31, 2008

COMMENTS

Note that “the economics consulting firm Global Insight ... found the very presence of Wal-Mart in a geographic market accounted for the savings, as competitors also cut prices in response to arrival of the discount retailer’s stores.” (http://adage.com/article?article_id=126062)
How long were these competitors able to survive? How long did these savings last? And how much did Wal-mart’s presence cost these communities in lost jobs and shuttered businesses?
The “savings” might be available to everyone, regardless of whether they shop at the new Wal-mart, but once again the downside of the Wal-mart’s low price pressure goes unnoticed in the articles, as the company’s PR department pulls the rabbit out of its hat: the “positive impact we have for all American families.”

Rich Garella in Philadelphia, Pennsylvania
Tuesday, April 01 at 09:54 AM

Rich : Great points. What is also not factored in is the cost to ALL taxpayers,whether they shop WalMart or not, when their respective states are having their state tax coffers dimished by millions of dollars, yearly, thanks to WalMart’s tax avoidance scams like REITS and PICs and royalty loopholes. What was is the cost vs. savings figures on that equation?And for how many years?

ddrb in
Tuesday, April 01 at 10:50 AM

Sorry, that should have read diminished.

ddrb in
Tuesday, April 01 at 10:51 AM

Rich Garella,

“How long were these competitors able to survive?”

The ones that really tried to compete*, are still in business!! The ones that didn’t are gone, along with their ‘high’ profit margins!!

* to compete - make customers want to shop at your business!! Guess what, that’s what Sam Walton did when he first started Wal-Mart and was up against the likes of K-Mart, Sears, J C Penny, etc., etc., etc.(All giants at the time)!! Remember, Wal-Mart started as a mom $ pop store, (Walton’s Five and dime)!!

RDS in
Tuesday, April 01 at 07:28 PM

RDS: Guess what, that’s what Sam Walton did when he first started Wal-Mart and was up against the likes of K-Mart, Sears, J C Penny, etc., etc., etc.(All giants at the time)!!-RDS~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Guess what,RDS? WalMart is once AGAIN up against the likes of K-Mart,Sears,J.C.Penney,etc., etc., etc.,---due to WalMart’s unapologetic greed and thanks to the mismanagement of the Shank tragedy, AND, their lengthy and shameless track record of indifference to social responsibilty....for years,now.

ddrb in
Wednesday, April 02 at 05:41 PM

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