Tuesday, June 23, 2009

Walmart Announces New 3-Tier Pricing Strategy

Walmart Announces New 3-Tier Pricing Strategy
Strategy mimics earlier Sears’s effort

By Bill Britton

Lee Scott, Walmart President and CEO, unveiled an exciting new pricing strategy for its 6,100 stores around the world. Scott said his model is “based on a Sears strategy from years ago that segmented products into ‘Good,’ ‘Better,’ ‘Best’ categories.” To distinguish Walmart’s effort, their marketers have assigned these category names: “Shoddiest,” “Shoddier,” and “Shoddy.”

To further leverage Walmart’s position in the marketplace, the company will emphasize the “Shoddiest” category in its buying plans. “Walmart wants to be second to none in offering the lowest prices and poorest quality, always.” The word “Always” has become synonymous with the Walmart logo and is proudly displayed on its store fronts and trucks.

The Walmart announcement is apparently the cause of last week’s 400-plus-point drop in the U.S. stock market and the 9-percent drop in equities around the world. The managing director general of the Asian Development Bank, Rajat M. Nag, said that “the shift toward lower-priced merchandise at Walmart will certainly depress the long-term growth of the Chinese economy and at the same time rein in consumer spending in the U.S.”

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