Wal-Mart Reapportions $1 Billion To Keep Prices Low, New Ads Reflect Push

Wal-Mart plans to aggressively keep prices down and continue that effort as a centerpiece of its marketing efforts, some of which is tied to its 50th anniversary and heritage as a low-price retailer. En route, new Nielsen data will help its efforts to stay below competitors on price levels, a top executive said this week.

The company says it will reapportion $1 billion in its current fiscal year to keep the prices at low levels in the food and consumable businesses. It will then try to use the traffic that generates higher sales in the rest of the store.

After five years, Wal-Mart has begun working with Nielsen again, allowing the measurement company to merge its sales data into its databases.

But Nielsen data will also give Wal-Mart a sense of competitors’ item-by-item pricing in varying markets to ensure "we will have price leadership and price separation across our categories and across the United States … it’s the heritage of how we do business,” said Duncan Mac Naughton, chief merchandising and marketing officer for Wal-Mart in the U.S.



On a national level, commercials the company has ready include one about the low-price guarantee, where high gas prices are mentioned as a reason to shop at Wal-Mart. A second spot is aimed at brand building as it highlights the low-price heritage by featuring a 50-year employee.

On a local level, a spot in the Sacramento market features an individual who shopped at a competitor (Safeway) before realizing the savings available at Wal-Mart.  

Speaking at an investor event, Mac Naughton said low prices are increasingly important as consumers struggle with higher gas prices and continued high unemployment. With the latter, the company does not envision much change soon.

“We’re in an election year, so there is not any significant hope for any step-change improvement in the economy at this time,” Mac Naughton said.

Wal-Mart is coming off a fiscal year where U.S. retail sales rose 1.5%. Mac Naughton said the reintroduction of a layaway program, along with the Christmas price guarantees, brought a successful holiday season. The layaway program was highlighted in TV spots.

Marketing in the holiday season was double what Wal-Mart spent in the previous quarter and included print, digital efforts and social media initiatives in addition to TV.

“We basically doubled down our marketing support,” Mac Naughton said.

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