Wal-Mart 'rounding down' prices to lure shoppers

Canadian shoppers are tightening their budgets and looking for easy ways to calculate what they'll be paying before the checkout line, and Wal-Mart Canada says that has inspired the company to remove decimal points from its top-selling items but not by rounding up.

This week, a price round-off campaign will gradually start to change items sold at prices marked to the cent $1.99 and $2.43 and so on in favour of price marks such as $1, $4, and $8.

A list of examples provided by Wal-Mart says a $1.88 tube of toothpaste falls to $1 and a $4.37 bottle of Aspirin drops to $3 although the new prices on those items also include discounts.

Asked whether shoppers at Wal-Mart's 312 Canadian outlets may find some prices have been rounded up, a spokesman for the company said he hadn't found any that had risen.

"Our strategy is very much to default [price] down. This is not a round-up exercise in any way, shape, or form," said Jeff Lobb, vice-president of marketing for Wal-Mart Canada, the country's biggest department store chain by revenue.

"Right now, our sense is that it's a rare customer who doesn't come into our store with a budget," Lobb said. More people are walking into Wal-Mart with "a list that's going to guide their purchases, potentially even a calculator, and a competitive flyer."

The new pricing campaign will simplify the process of tallying a shopping list before taxes, he said.

Wendy Evans, head of retail consultancy Evans and Co. Consultants Inc., said the Wal-Mart campaign is a simple concept that has a good chance of connecting with the average consumer.

"For decades and decades, retailers have always gone to the 95- or 99-cent endings as a psychological way of making the items seem less expensive," she said.

"This may just be a refreshing change to make it simple, and therefore distinguish them from the rest of the pack, particularly price-oriented retailers."

Low-priced items are a key to attracting consumers, but shoppers should also be conscious that dirt-cheap prices proliferate throughout the industry, said David Howell, president of Associate Marketing International.

"You've got to believe that it won't be Wal-Mart that will be taking the [financial] hit, it'll be the supplier," Howell said.

Deep price discounts can often force suppliers to reduce internal costs, which can include cutting jobs, to continue to drive a profit.

"We've become a society heavily motivated by discounting and eventually it breaks the backs of [some] companies," Howell said.

"There's got to be a value that's relative to product. Just continuing to discount creates hardship for everybody."

He suggested that Wal-Mart, and other retailers like the Bay and Sears, should focus on improving customer service rather than slashing prices to the bare minimum.

Wal-Mart has been successfully expanding its customer base in Canada with a rollout of supercentre stores, which carry a wide array of food items and produce along with the company's usual offerings.

The retailer hopes to open 26 locations this year by either renovating current spots or opening new stores.

However, Wal-Mart's lower-priced items still face challenges from supermarkets like Loblaws and Metro, as well as Canada's dollar store chains like B.C.-based Your Dollar Store With More and Montreal-headquartered Dollarama.

Lobb said Wal-Mart Canada has found that shoppers have changed their habits and are walking into the store hunting for bargains, with the intention of comparing prices with the competitors.

"Consumers are in [the] store more than ever," he said. "They're looking more now for what they need versus what they want."