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Perception is reality: Why Wal-Mart needs to show shoppers the money

August 16, 2011 by Annamaria Turano — Executive Director, MCAworks

Yesterday's Wall Street Journal highlights that Wal-Mart's "aura of price leadership" has experienced a downturn since the recession, according to surveys by retail consultants, analysts and brand experts. Customers have turned elsewhere – finding "better deals" at competitors including dollar stores, Aldi, and Amazon.

In the article, Wendy Liebmann, chief executive of consultancy WSL/Strategic Retail, comments that "the competitive landscape has changed." Her firm's recent study amongst 1,500 Wal-Mart shoppers found that 86% of the shoppers no longer thought Wal-Mart had the lowest prices.

Regardless of Wal-Mart's marketing messaging as well as its actual pricing strategy, shoppers no longer believe that Wal-Mart has the lower prices in the land. This is a case where perception is reality – and Wal-Mart is expected to suffer financially as a result of shoppers' misperceptions.

How can Wal-Mart return to glory? Wal-Mart needs to actively demonstrate and document the savings/low prices for its shoppers. As the saying goes, "the proof is in the pudding." (Actually, the current saying is not the reality; the original saying is "the proof of the pudding is in the eating.") In-store signage, advertising campaigns, walmart.com, etc. should explicitly highlight how Wal-Mart's prices undercut the competition – and specifically name the competitors, the products, and the pricing gaps.

Wal-Mart will hopefully not embody its own in-store brand ("Faded Glory") if it successfully capitalizes on the opportunity to clearly define and communicate its low prices.

About Annamaria Turano

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