Everyday low prices? Wal-Mart’s competitors can play that game too
SEAFOOD.COM NEWS April 9, 2014 -
As illuminated in Marketplace's great food stamps series, a simple formula pervades Wal-Mart's headquarters in Bentonville, Ark.: EDLC = EDLP. Short for Every Day Low Costs = Every Day Low Prices.
It's the mantra that allowed the retailer to take over the world, become the biggest employer in the country and drive smaller competitors out of business.
Today, analyst Scott Mushkin of Wolfe Research released a note to clients finding that Wal-Mart's price premiums over other retailers had started to erode in key markets such as Philadelphia, Atlanta, Houston and Chicago, sometimes to the point where a consumer wouldn't really notice the difference.
Let's take Kroger as an example. According to Mushkin, it's not necessarily that the grocer has started to leverage its global purchasing power to squeeze costs out of its suppliers, which is how Wal-Mart pushed prices so low over the years. Rather, it's using data analytics to figure out which items are important to discount at what times -- household cleaning products, for example -- to gain the maximum number of customers. In addition, Kroger is absorbing some of the cost of lower prices through high-tech restocking systems; Wal-Mart still depends on a labor-intensive process that lately has left shelves empty as the retailer tries to trim costs by cutting hours
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