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November 15, 2010

Wal-Mart Claims Savings on Candy, and Everything Else in Your Life

Filed under: Food/Groceries,Retail — Edgar (aka MrConsumer) @ 5:17 am

Wal-mart likes to make savings claims, and few people would quibble that the company is known for discounts.

Example 1:

Just before Halloween, Wal-mart advertised on TV that its Halloween candy was on average 20% cheaper than other retailers.

What’s their proof?

*MOUSE PRINT:

They said they surveyed national retailers’ regular price of just four specific candies (Snickers, Reese’s, Skittles, and Butterfingers), and on a per ounce basis, their prices were on average 20% less. Others’ sale prices were apparently ignored.

It probably would not stand up to legal or statistical scrutiny to make a broad general savings claim about candy just based on the prices of four products, and apparently not necessarily even comparing the same size bags. 

Example 2:

In television commercials, and in their October 31 circular, on the cover, the company claimed:

Huh? Merely because Wal-mart exists, the average family saves $2800 a year no matter where they shop? Mouse Print* asked Wal-mart’s PR department for an explanation. The company responded:

“Walmart helps families save an average of $2,800 a year, no matter where they shop, based on the company’s impact on the economy, according to a study by IHS Global Insight (updated in 2010, to reflect data through the end of 2009). The study includes jobs, wages, prices, consumer buying power, productivity and gross domestic product. It details how Walmart’s presence translates directly into savings for consumers.”

*MOUSE PRINT:

Reading the Global Insight statistical research (which appears to be written in a language resembling mumbo jumbo) and speaking to the report’s author clarified little other than based on the 2010 study, Wal-mart asserts that the average family benefits from a cumulative reduction in prices of 3.2% per year because Wal-mart is driving efficiencies throughout the economy. To come up with the $2800 claim, they had to take 3.2% of something, and that something works out to $88,000, that the researcher says the average family expends a year on goods and services.  This number seems much higher than what the true average is.

The 2010 study omits an important finding from their 2005 study, indicating that while prices may fall because of Wal-mart, so do wages:

“… lower inflation levels in the economy with Wal-Mart put downward pressure on nominal wages, … wage rates are only 2.2% lower overall .”

I certainly can understand that other retailers lower their prices when there is a Wal-mart in the area, so even if you never step into a Wal-mart you can save SOME money just because of their presence. But I don’t buy the proposition that what you pay for rent, movies, airfares, cars, utilities, restaurant meals, tuition, and every other service is affected by Wal-mart to the tune of being 3.2% less than they ordinarily would be. So, take their $2800 savings claim with a big grain of [Great Value] salt.

• • •

3 Comments

  1. “$88,000, that the researcher says the average family expends a year on goods and services” REALLY!! After uncle Sam takes his share, I don’t think the “average” family even brings home that much money.

    Comment by Peter — November 15, 2010 @ 11:15 am
  2. These tricks in advertisement claims are nothing new….hell…I learned about this in elementary school. It’s normal to hype your business the same as the average person hypes themselves up to others to make them “appear” better than they are. The consumer is responsible for educating themselves when it comes to fine print…(did I mention this is taught in elementary school?)
    I find people who get suckered into these claims are more victims of their own compulsive shopping habits than the big evil businesses taking advantage of them.

    Besides even if Walmart saved 2 families an average of $2800 a year then they are being truthful…they don’t say every family…just families.

    Comment by Jon — November 15, 2010 @ 1:16 pm
  3. If in their world the average family has 88K they are certainly not Wal-Mart employees.

    Comment by Rick — November 16, 2010 @ 2:25 pm

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