Black Friday is exactly two weeks away and the holiday season is just around the corner, which is causing the competition between retailers to intensify. Now Walmart executives are telling managers at its stores across the U.S. to price-match Amazon.com Amazon.com and other online retailers.
Greg Foran, the president and CEO of Walmart U.S., said that the price-matching plan simply formalized what many of the stores were already doing. “About half of the stores were doing it anyway,” said Foran during an earnings call via Reuters. The policy is known internally as “Online Price Match,” which is part of the “Ad Match” program.
The price-matching plan is expected to be applicable at Walmart’s stores across the U.S. Walmart currently has more than 4,300 retail store locations and 1.3 million employees across the U.S. Walmart’s decision to price-match Amazon.com is unique. Generally, I’ve only seen brick-and-mortar stores price-match products in the circulars at other retail stores in the past. Price-matching against a major online retailer is a very aggressive move.
Walmart’s aggressive pricing may also help curb showrooming. Showrooming is when a consumer looks at a product in brick-and-mortar stores and buys it online at lower prices. Sometimes consumers use their mobile devices to compare prices online while visiting brick-and-mortar stores and purchase the products from there if the price is the same or less. Mobile apps like RedLaser, BuyVia, ShopSavvy, The Find and PriceGrabber lets users scan barcodes at brick-and-mortar stores to compare prices across multiple online retailers.
On Thursday, Walmart reported its third quarter results. Walmart’s profits for the third quarter beat Wall Street expectations. However, its fourth-quarter profit outlook is below estimates due to aggressive holiday discounts. Consumers seem to be cutting back this holiday season, but lower gas prices may encourage an increase in spending at retail stores.
Walmart’s earnings for the quarter hit $3.71 billion for the three months ended October 31st. Revenue for the quarter hit $119 billion. Walmart said that the sales at U.S. stores open at least a year increased for the first time in seven quarters. Unfortunately, the sales in groceries were “flat” due to cuts in food stamps programs. According to ABC, Walmart’s e-commerce arm Walmart.com will be offering free shipping on top 100 items and price cuts on 20,000 items.
Last month, Walmart said that it was investing between $1.2 billion and $1.5 billion into its e-commerce and digital operations in the next fiscal year, which is up from about $1 billion this year. Walmart also plans to build two new online fulfillment centers in Georgia and Pennsylvania that are over one million square feet in size each.
“We have some things in our favor this fourth quarter, including lower fuel prices in the U.S. and other key markets, and we’re set to deliver for customers during this time,” said Walmart chief executive officer Doug McMillon in a statement.
Will the price-matching program help Walmart? Walmart already prices products very low compared to its competition, but I believe price-matching Amazon.com may drive a lot more foot traffic into its stores this holiday season. Personally, I visit Walmart’s retail stores about 2-3 times per month and I showroom while visiting. For example, last month I bought a 3.2 cu. ft. 2-door refrigerator and freezer at Walmart after reading that it was more expensive on Amazon.com. Now that I know that Walmart is matching Amazon.com prices, I believe that I will not showroom as much as I used to.
What are your thoughts about Walmart matching Amazon.com’s prices? Do you think you will visit Walmart more than you did before? Let us know in the comments below!