Wal-Mart Takes Credit for Lower Market Prices as Its Savings Claims are Rebuked

Implications: Wal-Mart takes credit for the benefits of Americas free market, while advertising activists fault their savings claim.  Here's why their argument fails.  

Analysis: Wal-Mart’ ego just got a boost.  Now, the world’s largest retailer which claims to make its customer’s lives better can now take credit for the savings consumers receive from its competitors too.  According to the National Advertising Division of the Better Business Bureau, Wal-Mart can’t claim that families save an average of $2,500 from shopping at Wal-Mart, but they take the credited for keeping prices low in the market place which contributes to average savings of about $2,500 annually.

The NAD’s argument is that if Wal-Mart didn’t exist, retail prices would go up.  But that ignores the fact that company’s like Target and Costco would just continue their current low price strategies and divide up Wal-Mart’s market share along with the other low price, discount competitors.

There is something dishonest, shallow, and self serving about a company that takes credit for something that is the result of America’s free enterprise system.  Whether Wal-Mart or another company, it’s our free market system that keeps prices low in a competitive market place.  The fact is Wal-Mart isn’t about making anyone’s life better or keeping market prices low.  It’s about making a profit and rightfully so.  In thousands of markets across the country, it has a practical monopoly.  In those predominantly rural markets, consumers could well benefit from lower prices, but instead pay as much, if not more, as urban consumers in larger markets at local Wal-Mart stores.

While Wal-Mart may have pioneered the concept of everyday low prices in the 1960’s, it’s the competition today that keeps prices low.  Otherwise, Wal-Mart would raise prices even more, especially in thousands of smaller, poorly served markets. On the whole, Wal-Mart is an amalgam of contradictions.  On the one hand, its everyday low cost strategy lowered consumer’s prices which initially befitted consumers, while driving many competitors out business.  On the other, it is responsible for bringing retailing down to its lowest common denominator which stresses sameness and poor quality often at higher prices today.

Whether consumers and communities are better off in absolute terms depends on the standard applied.  If subsistence and survival is the measure, then the answer is probably yes.  If a better life is the standard, then the answer is much more problematic.  It’s important to distinguish between what circumstances force us to do and what we aspire to do.  Clearly, there isn’t very much aspirational about Wal-Mart which may say as much about them as it does about our current times.  But for all the good and bad, we should at least be honest with ourselves even if Wal-Mart’s management chooses to deceive itself.