Wal-Mart has been running television advertisements lately trumpeting the assertion that they save the average American family something like $2,200 per year. At first I just let the promotion blow right over my head but on a recent trip to our closest Wal-Mart (about 40 miles away) I took a few moments to think about their promotion because my wife and I found ourselves saying "we can get that cheaper at home."
First off, those Wal-Mart dudes have a lot of gall assuming that they know exactly what price every other retailer on the planet is charging for the same items they have stocked in their Wal-Mart stores. Secondly, it's more than a bit arrogant for Wal-Mart to assume that every item purchased in their stores is a must have item which a person will immediately find another retail source for if Wal-Mart doesn't sell it to them. That would be the only way they could have a valid claim about how much money their pricing saves for anyone.
I live in a region with a population small enough that once Wal-Mart stores become entrenched in an area, their level of retail competition drops to nearly zero and in light of that I have noticed a particularly interesting dynamic. It seems that where Wal-Mart has a captive audience such as is the case here in the northern most regions of Wisconsin, once the competition dies out, Wal-Mart's prices become conspicuously similar to or even higher than the prices of the retailers they drove under. I don't care what anybody says: that's a mode of operation similar to the way Al Capone and his boys did business in Chicago.
The deal goes like this: You come in low priced, undercut the competition until they starve out and then set your price points wherever you'd like to because you've become the only game in town.
Sam Walton must be rolling in his grave.
Take the first steps to building your portfolio.View Course »