UPDATE: Wal-Mart Black Friday Update
Commentary By: David
Issue: Wal-Mart’s Black Friday Pricing Choices
A quick update on our commentary posted Wednesday on Wal-Mart’s Holiday 2005 pricing strategy for ‘Black Friday.’ As we noted, Wal-Mart moved aggressively to drive store traffic in the critical holiday period. Measures used this week included destination advertising (Garth Brooks new album), competitive price match guarantees and ‘door busters’ (deep discounts on a few select products available in limited quantities.)
The measures were indeed successful at driving traffic, but as we suggested in our commentary, the traffic came at a price. It wasn’t the price we named - erosion of the brand equity in Wal-Mart associated with ‘Always Low Prices’ (we suggested that by offering price-match guarantees, Wal-Mart was validating competitors as being legitimate sources for low prices). It is too soon to judge the long-term effect of this pricing behavior on consumers’ brand perception of Wal-Mart. The immediate, obvious price Wal-Mart payed was in more bad PR - something the chain can ill-afford. Several people around the country were trampled by crowds at Wal-Mart stores as they opened for the morning. In addition, CNN covered the angry reaction of consumers realizing that the deep discounts offered for Wal-Mart specials were available on a very limited supply of items. So even before the long-term consequences are assessed, Wal-Mart has paid a price for top-line results.