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Walmart Halts Their Price Roll Backs

In an effort to stimulate slow US sales Walmart cut back on their already low prices. These price breaks were intended to overwhelm the shopper and get them to buy more regular priced items.

In May, according to one shopping website, the price of a 40-oz. bottle of Heinz ketchup, which had been $2.42, was chopped to $1. Kraft mac and cheese, which had been going for $3.58, was reduced to $2.50. The rollback of a 50-oz. bottle of Tide laundry detergent, which was priced in the $7.48-$8.12 range, gave shoppers a $2.50 discount.
Walmart soon found out that customers were taking the super low priced items and leaving the store.  They weren’t buying the other regular priced items. The rollback on the rollback backfired, actually creating worse sales which in turn failed to pull their stock up.  This clearly reflects the mood of the American consumer and how frugal shoppers have become.

Of the rollback strategy, Bill Simon, the president and CEO of Walmart U.S., told investors at a September conference, “It did not do what we had hoped it would do. It did, however, drive price perception. It did not drive sales or traffic.”

Instead of continuing the cut prices, Walmart needs to do a better job stimulating revenue through existing shoppers.   It needs to better understand the state of the economy and shoppers penny-pinching habits.  Walmart is doing well outside the US market, adding nearly 5 million sq ft of retail space with an 11% increase in International revenue.

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