Gaillardia.departmentofwriting.org



Rachel K. Valice

Sister Lucia Treanor, FSE

WRT 150-42

1 November 2011

The Costs of Price Matching

The gross domestic product, or GDP, of a country is “a measure of the value of all goods and services newly produced in a country during some period of time,” usually annually (Taylor). If Walmart, a multinational retail corporation, were to be placed on a list of countries from highest to lowest GDP, it would be number 53 out of 190 definitive countries (“The World Factbook”). With annual sales over $137 billion (“Wal-Mart”), the corporation surpasses Ukraine and comes close to upping Kazakhstan (“The World Factbook”). Part of this success, as well as the success of other big businesses such as Target, Best Buy, Staples, Sears, and others may be accredited to a business practice known as “price matching.”

Price matching is the tactic of one business altering its own prices to match or beat those of other companies, usually on an individual person-by-person basis. Major corporations are rolling out their price match policies in preparation for the 2011 autumn-to-winter holiday shopping season, “which accounts for as much as 40 percent of retailers’ annual revenue” (Little), that includes Thanksgiving, Black Friday, Christmas, Chanukah, and even New Year’s Eve. Walmart is leading the pack, with a “temporary price matching policy [that] will give customers a store gift card for the difference of any eligible product purchased from  Nov. 1 – Dec. 25 that is found at another store for a lower price” (Little). For example, if a consumer purchases a video game for $60 at Walmart but it is then seen being sold for $40 across the street, the consumer can bring the game back to Walmart with the original receipt and the competitor’s printed ad for the same product to receive a gift card for the $20 difference. However, outside of the holidays, Walmart’s Ad Match Guarantee is much more complex (See Appendix A).

The Effect on Small Business Owners

Price matching sounds like a great deal for customers; buy the product you want at the store you want for the ideal price. This concept can especially apply to big-buck purchases such as DVDs, Blu-Rays, video games, furniture, jewelry, and electronics such as MP3 players, gaming consoles, personal computers, and television sets. While customers and big businesses alike may benefit from these transactions, small businesses suffer. Small businesses, local stores, and mom-and-pop specialty shops order smaller inventory, which usually means that they pay more for their stock than corporate giants like Staples and Target, who buy in bulk. This means that local businesses may not be able to afford a price matching policy, as they may lose too much money, and as a result can lose customers to the bigger companies. This not only affects the business itself, but the community that surrounds it. Has Walmart ever sponsored your son or daughter’s little league softball team? Did Target ever hold an ice cream social fundraiser at their quaint little shop by the beach to raise money for your uncle’s chemo treatments? Did Sears ever donate to your local high school so that students could have the new textbooks they so desperately needed? By choosing a chain store over a local business, customers save a buck but inadvertently affect their community in a negative way.

Price matching is also a hassle for costumers; businesses, rather than keeping up-to-date on competitive pricing, expect consumers to do all the work. Many (if not all) stores offering a price match guarantee require some form of proof, such as a printed ad, before providing compensation. In most cases, the customer must also have previously purchased the item or must be at the register, ready to check out, before appealing its price. This is especially true at Walmart, where the holiday policy is to give the consumer a gift card for the difference, rather than to make a refund. Many businesses also exclude internet pricing from their policy, which in most cases (such as on ) is cheaper. While it may be helpful for a customer to price match on a previously purchased product, it would be easier for a bargain-hunter in the long run to buy from the cheapest shop in the first place.

Behind The Facade

Is the tactic of price matching truly a great deal for savvy bargain hunters, or simply a method used by stores to lure buyers into their lair? When Walmart issues a gift card for the difference, rather than cash back or credit on a credit card, according to finance expert Carmen Wong Ulrich, "You have to come back and spend your money” (“Price Matching”). Best Buy is currently fighting an ongoing class action lawsuit brought against their New York stores, where multiple customers who have come forward were reportedly refused the benefits of the company’s alleged price match guarantee (O’Donnell). The plaintiff in the case complains that

Best Buy uses its price match guarantee policy as a ploy to lure unsuspecting consumers into its stores and to induce them to purchase its merchandise, while allegedly having an undisclosed policy that requires employees to aggressively deny and discourage consumers’ legitimate price match requests. (O’Donnell)

An October, 2006 work memo from a New York Best Buy, quoted in court, states, “What is the first thing we do when a customer comes in to our humble box brandishing a competitor’s ad asking for a price match? We attempt to build a case against the price match,” before going on to list a variety of distractions and tactics to make the sale, rather than make the price match (Cheng).

Price Matching, Organic Farming, and the Agricultural Industry

Price matching doesn’t only affect the consumer products industry, but agriculture as well. Superstores like Walmart and Target have in recent decades begun offering groceries alongside their normally diverse stock, which includes such necessary goods as floor lamps and pajamas. These one-stop shops make the lives of American citizens all the easier, where they can make one stop at a single store that has everything they could possibly need or want. If the food they wish to purchase is cheaper somewhere else, some of these stores may even accept competitor coupons. But as more and more corporate conglomerates take over the food industry, the health and vitality of not only the planet- but the people- suffers. In 2010, in a total disregard for ethical, political, societal, or even cultural norms, Walmart produce sold in China was found to have noticeable traces of pesticides- the use of which is illegal on Chinese food products, due to safety laws passed by the Ministry of Agriculture (Xinyuan). The chemicals are banned in China for good reason, too; continuous consumption of pesticide residue on fruits and vegetables not only results in acute and reproductive toxicity, but also an increase in the risk for pesticide poisoning in humans, particularly children, where 50% of cases reported through the Minnesota Regional Poison Control Center concerned babies less than 3 years of age (Garry). Pesticides have also been found to be “up to ten times more toxic in the developing bodies of infants and children than in adults” (Fromartz). Not only that, but organic farming (despite being more expensive and time-consuming) is more environmental stabilizing and beneficial than conventional, modern methods of farming, where vast amounts of harmful chemicals, herbicides, and pesticides may be used and irreparable soil erosion commonly occurs. Other personal health factors may also come into play; buying and consuming organically-grown fruits, vegetables, herbs, meats, and dairy products is not only good for the Earth, but good for the body; organic produce from local farms and farmer’s markets “contain higher levels of cancer-fighting antioxidants than conventional food, and the difference is enough to have a ‘significant impact on health and nutrition,’ according to a recent study published in the journal of the American Chemical Society” (Fossel).

As today’s society pushes for more and more organically produced products, Walmart has been more than happy to oblige by ushering in their own wave of organic goods in their stores (organic cotton Yoga pants not withstanding). Rather than price matching, customers who now want the better deal on organic foods can speed over to their nearest Walmart megastore, at the expense of local farmers and whole-food shops that are growing (pun not intended) increasingly concerned. Richard DeWilde, an organic farmer from Wisconsin, expressed doubt and dismay at Walmart’s announcement to double the amount of “organic” goods offered in their stores: “He fears that the company will use its market strength to drive down prices and hurt U.S. farmers” (Gogoi). DeWilde and other farmers also fear that the corporatization of organic foods could not only lower the standards “for what is classified as organic food,” but also increase imports of supplies “from China and other overseas markets,” further taking business away from the hands of American workers (Gogoi). As well as taking business away from local farmers, Walmart’s “environmentally friendly” organic foods are anything but, as they still must be imported into the country and trucked across the continent before it can reach your dinner table. Whereas buying from a market down street only requires the gas your car consumes in that distance, further reducing your carbon footprint.

Corporate conglomerates thrive on a basic concept of supply and demand; consumers demand low prices, and companies are more than happy to supply products at prices low enough to run competitors out of town. Price matching is a scam that hurts customers, small businesses, and entire communities alike, blanketed as a money-saving miracle for those who are unawares. If one can spare the money, not only does buying from smaller businesses have both local and global advantages (like a ripple effect), but studies have shown that buying for reasons other than spending money on oneself can have positive psychological reinforcements (Tierney). Also by shopping locally, we can put a stopper on the flow of bad business and greedy corporatization.

Appendix A: Walmart’s Price Match Policy (from )

Our Ad Match Guarantee

We’re committed to providing low prices every day. On everything. So if you find a lower advertised price on an identical product, tell us and we’ll match it. Right at the register.

We gladly match the price in the following types of ads:*

• Buy one, get one free ads with a specified price

◦ Example: Buy one for $2.49, get one free (BOGO)

• Competitors' ads that feature a specific item for a specified price.

• Preferred shopping card prices for specific items that are in a printed ad.

• For fresh produce and meat items when the price is offered in the same unit type (lb. for lb.; each for each)

*The following are guidelines and limitations:

• We will match any local competitor's advertised price.

• We do not require customers to have the ad with them to honor a competitor's ad.

• Items purchased must be identical to the ad (size, quantity, brand, flavor, color, etc.)

We DO NOT match the price in the following types of competitor ads:

• Items that require a separate purchase to get the ad price

◦ example: "Buy [item A] to get [item B] for $C"

• Items with no actual price that require a purchase to get free product

◦ example: "Buy both [items A & B] to get [item C] for free"

• Items that require a purchase to get a competitors' gift card

◦ example: "Buy [item A] to get a $B gift card

• Buy one, get one free (BOGO) ads with no actual price given

• Going out of business or closeout prices

• Percentage off

◦ example: "All mascara, 40% off"

• Competitors' private label price promotions

We do not honor:

• Ads when the actual price for items cannot be determined.

• Internet pricing

• Misprinted ad prices of other retailers

• "Going out of business" sales or "close out" prices

Works Cited

Cheng, Jacqui. "Lawsuit: Best Buy Has ‘anti-price Matching Policy’" Ars Technica. Condé Nast Digital, 2009. Web. 01 Nov. 2011.

Felsted, Andrea. "Supermarkets Feel the Pinch." . The Financial Times Ltd., 5 Oct. 2011. Web. 1 Nov. 2011.

Fontinelle, Amy. "How Grocery Price Matching Can save You Money" WFXS, MyFoxWausau - News and Weather for Wausau, WI. WorldNow and WFXS, 29 Oct. 2011. Web. 01 Nov. 2011.

Fossel, Peter V. "Antioxidants." Organic Farming: Everything You Need To Know. St. Paul, MN: Voyageur, 2007. 8. Print.

Fromartz, Samuel. Organic, Inc.: Natural Foods and How They Grew. Reprint ed. Orlando: Harcourt, 2007. 3. Print.

Garry, Vincent F. "Pesticides and children." Toxicology and Applied Pharmacology. 198.2. (2004): 152-63. ScienceDirect. Web. 10 November 2011.

Gogoi, Pallavi. "Wal-Mart's Organic Offensive." Bloomberg Businessweek. Bloomberg L.P., 29 Mar. 2006. Web. 10 Nov. 2011.

Kozierok, Charles M. "Price Matching." The PC Guide. Charles M. Kozierok. Web. 01 Nov. 2011.

Li, Shan. "Retail Roundup: Wal-Mart Price-matching, Black Friday at Target, BAM Opens Bookstores." . Los Angeles Times, 29 Oct. 2011. Web. 01 Nov. 2011.

Little, Lyneka. "How Does Walmart’s Price Match Measure Up?" . ABC News Internet Ventures, 25 Oct. 2011. Web. 01 Nov. 2011.

O'Donnell, Matt. "Best Buy Price Match Guarantee Class Action Lawsuit." Top Class Actions. Top Class Actions LLC, 13 May 2011. Web. 01 Nov. 2011.

"Price Matching: Watch the Fine Print." CBS News. CBS Interactive Inc., 25 Oct. 2011. Web. 01 Nov. 2011.

Russell, Brandon. "Is Walmart's New Christmas Price Guarantee Good for Tech-Lovers?" TechnoBuffalo. TechnoBuffalo, 30 Oct. 2011. Web. 01 Nov. 2011.

Taylor, John. "Measuring GDP." Principles of Macroeconomics. 5th ed. Stamford: Cengage Learning, 2006. 137. Print.

"Wal-Mart: The Facts." National Organization for Women (NOW). National Organization for Women. Web. 01 Nov. 2011.

": Our Ad Match Guarantee." . Wal-Mart Stores, Inc. Web. 10 Nov. 2011.

"The World Factbook." Central Intelligence Agency Website. Web. 01 Nov. 2011.

Xinyuan, Wang. "Ick: GP Claims Pesticides Found on Wal-Mart, Ito Yokado Produce." Global Times. Global Times, 16 Mar. 2010. Web. 10 Nov. 2011.

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