California Attorney General Jerry Brown - a former California Governor, CA Secretary of State, Mayor of Oakland, and President of the Patrick Stewart fan club - announced a settlement with Wal-Mart today in which the retailer was fined $1.4 million and ordered to implement a “get it free” program for California consumers. This after an investigation found that the store overcharged for numerous items at checkout.
Actually, the investigation and settlement announcement was a joint venture with San Diego County District Attorney Bonnie Dumanis, who has a much shorter but waaaaayyyyy more interesting Wikipedia entry than AG Brown. In fact, Dumanis, a Republican, is the first openly gay or lesbian District Attorney in the county, and the first Jewish woman to hold the post. Fancy that.
Anyway, back to the story we’re here to tell. Apparently, Investigators conducting random price-checking across the state found that 164 Wal-Mart Stores in 30 counties had made scanning errors. On average, customers who were overcharged paid an extra $8.40 at checkout.
Christine Gasparac, a spokeswoman for Brown, said state investigators concluded that “these were systemic problems,” not just run-of-the-mill mistakes.
“Systemic problems” might sounds bad to some, but one person’s systemic problems are another person’s financial opportunity. As the LA Times blog puts it - if Wal-Mart’s price scanners are wrong, you can make a quick $3. So the moral to this story - and every blog post I write today will have a moral - is to shop at Wal-Mart, cross your fingers that their registers go insane, and then collect a cool handful of George Washingtons.
Wal-Mart now promises to give back $3 to customers any time a pricing mistake is discovered. If the mispriced item sells for less than $3, you get it free. The refund program begins immediately and will last for four years, but it’s up to shoppers to spot any disparity between what a product is listed for on the shelf and what’s rung up by the price scanner.
The company was also ordered to pay $1.2 million in penalties; $190,621 to reimburse costs to numerous state agencies and prosecutors’ offices; and $50,000 to a consumer-protection prosecution trust fund.
Wal-Mart to pay $3 if price-scanning errors occur [Sacramento Bee]
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Posted by Corey Himrod | Permalink
The biggest oil company in the world and the biggest retailer in the world are loving life as the economy sinks.
Wal-Mart stock has risen 20% since the start of the fiscal year. Exxon Mobile just posted the largest quarterly earnings in American history- to the tune of 14.83 billion dollars. The recession has done wonders for both companies; the volatile price of oil, puts Exxon Mobile in the position to capitalize on futures from supply-wary market analysts, while Wal-Mart continues to post double-digit profits because of the high number of price-conscious consumers who are forced to trade down - even if it’s against their will.
Many more-upscale retailers, such as Target, are not doing quite as well during the recession. BusinessWeek reports that looking at the most recent quarter over the past year, Wal-Mart’s same store sales are up 5% while Target’s are down 0.4% and K-Mart’s are down 5.6%.
But these days are numbered. Wal-Mart knows that the recession won’t last forever. This week, they unveiled plans to focus more on renovating existing stores next year than opening new stores. Wal-Mart realizes that when the economy turns up again, many of its new customers will want to shop elsewhere - and they’re trying to stop it. The question is: will it work?
Wal-Mart Wins Big During Downturn [BusinessWeek]
These are heady times for Wal-Mart (WMT). The Bentonville (Ark.) retailer has been enjoying double-digit profit growth and strong sales as bargain hunters crowd its aisles. Its stock is up about 20% since the start of the year. And shoppers like Sal Garcia of Downey, Calif., are joining the growing ranks of loyal customers. “Look,” says Garcia, 52, putting the last of 10 shopping bags into the trunk of his Lexus, “all that for $54!”
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Posted by Luke West | Permalink
Oct30
Wal-Mart gets a makeover
Wal-Mart is the Madonna of retailers - constantly re-inventing itself.
At this week’s Analysts’ meeting, Wal-Mart announced that it was going to focus its investments on improving current stores and expanding internationally in 2009. Apparently they got the party started early. In a story from the Northwest Arkansas Daily News, Fayetteville, Arkansas residents got a taste of Wal-Mart’s new look. Having already updated their logo, they are taking it several steps forward by using “light and color” to tie the different departments of the store together, in an attempt to create a more efficient, cohesive, and pleasant shopping experience.
Wal-Mart has historically focused less on store appearance, and more on driving-down prices. In years past, Wal-Mart stores were characterized by large, industrial steel shelving with products stacked into the stratosphere, lighting like a coroner’s office, narrow yet crowded isles, and an all-around depressing and stressful shopping experience. Wal-Mart’s Vice President for Store Appearance (must be a new position), Joe Tapper, addresses some of these problems in a story from BusinessWeek:
“We’re trying to make it more experiential, rather than just stuff we’re selling...We’ve placed emphasis on making it more enjoyable. Having shelves filled with cardboard boxes worked for a time, but has seen its day, Tapper said.”
This move could, in part, be due to the fact that Target stores tend to have a reputation of being cleaner, more stylish and more organized than Wal-Mart. Some people recognize this and it can have an effect on where they shop. Wal-Mart has studied the shopping habits of it’s customers and it’s customers, themselves. This store platform will eventually see the debut of Wal-Mart’s ”Smart Network” which monitors customer activity and displays advertisements based on time of day or who is in the store. They have certainly have come up with some interesting information. This quote from BusinessWeek made my all-time top 15 favorite quotes from Wal-Mart Execs:
“Our signs are more female-friendly,” Tapper said. “The signs are all curved. Those things have been looked at and we’re trying to make those more friendly.”
As a man, I have always preferred the signs at my grocery store to be straight, not curved. Everyone knows curved signs are for women - even Wal-Mart. What a zinger.
Posted by Luke West | Permalink
As many Americans struggle to keep their financial heads above water, Wal-Mart has repeatedly reported gains as customers hunt for the lowest prices on staple-items such as food. If you are one of the many people choose where to shop, based solely on price, you’d have to notice the German grocer Aldi. A story from Ocala.com (Ocala, Fla.) claims that Aldi has lower prices on many basic food-items than Wal-Mart. From the article:
“A gallon of Aldi milk goes for $2.79, but $3.48 at Wal-Mart; Crispy Rice cereal at Aldi is $1.59 for a 20-ounce box, but even the off-brand Crispy Rice at Wal-Mart is more, $2.16 for 18 ounces.” “The list goes on: Aldi hamburger buns go for 85 cents, $1.13 at Wal-Mart; 34.5 ounces of coffee is $4.49 at Aldi and $6.74 at Wal-Mart; bananas are 45 cents per pound at Aldi, 64 cents per pound at Wal-Mart.”
Aldi is a ‘bare-bones’ type of store, focusing on low-prices, not appearances. They got their start in Germany in the 1970’s but have since spread to the U.S. and now operate around 800 retail locations, mainly in the eastern half of the U.S. They sell off-brand generics, don’t typically use bags, and rarely accept payment other than cash. But in times like these, more and more Americans care less about brand-identity and more about price.
Last year, Wal-Mart sold their 85 stores in Germany to a German rival and top retailer, Metro AG, citing losses. Now a German retailer is beating their prices on generic foods, on Wal-Mart’s own turf. Look out Wal-Mart, here comes Aldi.
Posted by Luke West | Permalink
Just in time Three months before the holidays, Wal-Mart is challenging fellow toy retailers to try to match its prices on Christmas gifts. The retailer has a history of relentlessly undercutting its competitors, but rival retailers like Target and KB Toys aren’t taking Wal-Mart’s price cuts lying down. After announcing its price cuts last week, several other retailers countered with price cuts of their own. With any luck, the cuts will convince parents to spend big and spend soon on toys for Christmas.
The race to the bottom on toy prices shows how influential retailers can be in setting prices for the products sold in their stores. Wal-Mart might be losing money on its $10 Barbie dolls, but it’s dragging the entire toy industry down with it. One interesting quote, from an executive at Toys ‘R’ Us, highlighted how narrow-minded shoppers’ focus can be: “value is not just about cheapness,” he said, and he’s right. Wal-Mart’s toys might be cheap, but problems persist with almost every aspect of the manufacturing process. Are workers rights, American wages and children’s safety worth a $10 toy?
Wal-Mart Sparks War Among Big Toy Sellers [Wall Street Journal]
Retail price wars are starting early this year, and the latest weapon is the $10 toy—a signal that retailers are bracing for a rough-and-tumble Christmas shopping season.
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Posted by Alex Goldschmidt | Permalink
SANTA TO WORK LONGER HOURS WITHOUT OVERTIME THIS YEAR
Wal-Mart announced this week that it will start cutting toy prices almost three months before Christmas. To which Santa Claus replied, “Seriously?”
Wal-Mart starts the discounting early this year [BloggingStocks]
According to The Wall Street Journal, “Wal-Mart Stores, Inc. said it will cut prices on some of the most popular toys and speed up the opening of Christmas shops in its stores nationwide as it tries to lure budget-conscious shoppers and jump start its biggest selling season.”
Wal-Mart: Coal In The Retail Industry’s Stocking [24/7 Wall St.]
Wal-Mart’s action is a typical method for burying the competition. It can afford almost endless inventory build-ups for the busy shopping season. It can pull in the very modest amount that the consumer has to spend and leave other retailers with scraps off the table.
In which Walmart explains why we’re all doomed. [Writing on the Wal]
Obviously, I’m a masochist. I actually read Walmart’s press release on its early rollback of toy prices. While the Play-Doh Ice Cream Shop would be tempting if it weren’t Walmart we’re talking about here, I was much more struck by the survey results at the bottom of the document. Most notably:
Sixty-one percent of Americans do not plan on making cut-backs on how much they spend this Christmas season.
*Those who do plan on making cut-backs, plan on cutting back $50 or less.
Don’t you think that result seems just a tad self-interested? Why is that stat there if not to convince people to spend more whether they can afford to or not? I suspect Walmart has declared Christmas early because they’re afraid nobody will have any money left in December.
After the jump, Wal-Mart shuts down DRM music downloads, managers make up their own rules and 210,000 toasters get recalled.
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Posted by Alex Goldschmidt | Permalink
Back in April, the Denver Post conducted a survey of grocery prices at Wal-Mart supercenters in several Denver neighborhoods. Over a number of weeks, the survey found Wal-Mart charged more for groceries at its stores in low-income neighborhoods than in higher income areas. As the article noted, “It’s not cheap being poor.”
A survey done recently in Florida corroborates those findings. WKMG in Central Florida went to several Wal-Mart stores in neighborhoods of varying income levels and found consistent price disparities at each. In each case, products were cheaper in higher income areas.
This trend points to a pricing scheme that takes advantage of lower income shoppers who can’t afford to drive to a competing store for groceries. Wal-Mart might claim to help people “Save Money” and “Live Better,” but there’s nothing charitable about taking advantage of consumers already struggling to get by. To those of you with multiple Wal-Marts in your area: have you noticed this trend?
Wal-Mart Price Discrepancies Investigated [WKMG-TV (Fla.)]
Apparent cost discrepancies at Central Florida Wal-Mart stores were investigated after the Problem Solvers received a tip from a viewer alleging different prices for the same items.
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Posted by Alex Goldschmidt | Permalink
News broke last week that Wal-Mart raised gasoline prices at its stores in Texas just before Hurricane Ike hit the area. Consumers in the area didn’t fail to notice, despite the coming storm. Texas state law protects against price gouging, especially during a disaster or emergency.
Now, news from Arkansas tells that the Attorney General there will subpoena “30 gasoline retailers” as part of an investigation into gas price hikes around the time of Hurricane Ike. Though the article doesn’t list the gas retailers in question, we assume it includes Wal-Mart, which has several dozen gas stations in the state. From the news brief on the Arkansas News Bureau’s website:
Arkansas law prohibits businesses from raising prices for motor fuel, food and certain other products by more than 10 percent within 30 days of a declaration of emergency. Violators can be fined up to $10,000 for each transaction in which a customer is overcharged. Fuel prices in Arkansas rose dramatically over a three-day period during the storm’s mainland trek.
Consumerist also brings news of price gouging, but in a different place and on different items. A company insider in Kentucky explains the price of pre-charged cell phone batteries shot up to $19 a piece - almost doubling in cost, in some cases - in the days preceding the hurricane. When power was knocked out to parts of the state, the store sold out of batteries despite the higher price. From Consumerist:
Now today all of our car chargers go up nearly 50%. In fact, every charger, car or wall, in our store is a flat $19.00, when car chargers were $10.00 and wall chargers were $15.00 yesterday. This is hardly a coincidence, and it’s so blatently obvious to our customers. I can’t believe Walmart would do something so totally against their own mantra of Save Money, Live Better. This is more like “Raise Prices, Screw Suffering Customers!”
Price gouging disaster victims is exploitative and potentially illegal - but also destroys the good publicity Wal-Mart frequently seeks after natural disasters. The company holds high profile donation events and invites professional photographers, but clearly isn’t committed to helping disaster victims when there’s no PR benefit for the company.
For those of you who have visited a Wal-Mart store before or after a disaster or emergency, have you noticed higher prices on essentials?
Posted by Alex Goldschmidt | Permalink
The past couple weeks have seen plenty of stories describing ways in which Wal-Mart has mobilized to aid the Gulf Coast in preparation and relief efforts during hurricane season.
It seems, however, that even though the corporation was making efforts to lessen the blow of the storm, they still haven’t lost sight of the bottom-line. In a story posted yesterday in The Examiner, Wal-Mart was accused of price-gouging gasoline at one of their stations along an evacuation route in Southeast Texas. The Wal-Mart/Murphy USA located on U.S. 69 in Lumberton raised their price of gasoline a total of 12 cents in the day leading up to the evacuation for Hurricane Gustav, then another 10 cents when the evacuation was announced.
These prices were NOT consistent with other gas-stations in the area and following the storm, prices dropped again to reflect market prices. And despite a gas station manager claiming that prices went up because of a “gas price rise”, the cost of oil per barrel dropped over each of the three days.
Evacuation Gas Game [The Examiner (Texas)]:
In the days and hours leading to the potential call for a mandatory evacuation for Southeast Texas residents the Texas Department of Transportation (TxDOT) blasted across its electronic billboard alert system that a hurricane was coming and residents needed to fill up their tanks with gasoline.
According to a local wholesale fuel provider, most everyone heeded TxDOT’s advice, but The Examiner also kept close watch on one gasoline retailer located along the main evacuation route from Southeast Texas.
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Posted by Luke West | Permalink
This article originally appeared on the Huffington Post.
It must sound strange to American consumers to hear that the government of Puerto Rico this week “warned” Wal-Mart to raise its prices on milk---and that Wal-Mart agreed! Government regulators said that Wal-Mart de Puerto Rico was selling its Great Value branded milk at $1.46 a quart---or 36 cents below the legal price.
This is not an isolated incident for Wal-Mart. In 1998, a pharmacist in West Bend, Wisconsin charged that Wal-Mart was selling milk below cost, in violation of a Wisconsin state law. In September of 2000, state officials filed a formal complaint against Wal-Mart, charging that the company sold milk, butter, cigarettes, laundry detergent and other items below cost in West Bend, Racine, Beloit, Tomah and Oshkosh, Wisconsin. “There’s no way they could be buying it that cheap and turning a profit,” the pharmacist said. Three years later, the Wisconsin Division of Trade and Consumer Protection reached a “settlement” with Wal-Mart in this case.
Wisconsin law allows a retailer to sell an item below cost---but only as a response to below cost prices at their competitors. Wal-Mart would have had to document sales receipts from merchandise purchased below cost at competitors, or clipped ads running below cost prices to show they were responding to other merchants’ prices. That’s what the pharmacist did to nail Wal-Mart: she bought milk at Wal-Mart and kept her receipts. Similar claims against Wal-Mart pricing were filed by at least 4 other merchants in the area. The West Bend pharmacist said that when Wal-Mart opened one block from her pharmacy, she had to remove the milk cooler in her store, because sales fell by 80%. This caused her to lose “cross-traffic” sales for other items in her store. Wal-Mart faced up to $175,000 in fines, but got off easy in Wisconsin with only a $15,000 payment to cover the state’s cost of investigating the retailer. “They did a number on us,” the West Bend pharmacist admitted. Puerto Rico could have fined Wal-Mart for illegal pricing---but they didn’t. When they got nabbed, Wal-Mart agreed immediately to raise their milk prices. The company put out the standard press release saying it was committed to adhering to all local laws, and that it corrected the price as soon as it learned of the problem.
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Posted by Al Norman | Permalink
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