Can someone explain this?

[Mskanga]

How two stores from the same company ( walmart ) can charge different prices for the same items within 15 miles from each other? I just don't get it.

 

[Serena]

Stores and gas stations do it all the time.

 

[monkeyboy]

It's called regional pricing

based on demand and sales volume of certain SKU's

 

[Mskanga]

Yes but they are privately owned, walmarts are not.

 

[Serena]

Originally posted by monkeyboy
It's called regional pricing

based on demand and sales volume of certain SKU's

yeah, what he said.

 

[Mskanga]

So, the more they sell the cheaper or the other way around?

 

[Serena]

It depends.

In some areas, they jack up the prices because people will pay more.

 

[monkeyboy]

Originally posted by Mskanga
So, the more they sell the cheaper or the other way around?

Other way

If item 1 sells better in location A it will be higher in price
BUT
Location B will have same item, because its a Stocked Item

Now if its a sale item (Sales Flyer) prices would be the same in Some georaphic areas (towns by town) but still may vary State by state

Ever look up a flyer online?
They ask for Zip code right?
Try putting in a diffrernet one and compare prices

 

[bobbiwoz]

Walmarts here do too. I live about 6 miles from 2 different Walmarts and they have different pet food prices.

Bobbi

 

[stinkerbelle]

how about this?

size large green shrt - $24.99
size large orange shirt (same style)- $9.99
size medium green shirt (same style) - $34

American Eagle does this - many many years ago I got into an arguement with a sales associate saying I wanted the "large green" and the "large orange" price...as they were the same shirt.

they base their priceing on demand of size/style.
I can see - patterned shirts being more money then solid color...but different colors?

 

[Jenn Lynn]

They can also market differently to each area. Lots of times the sales flyers are different.

Ex.: My MIL has a Wal-mart in her town and there is one about 15 min away in another town. Each got different Ads (that were in the newspaper) for Black Friday. MIL happened to get the Ad for the one that was in the other town. The one in her town honored the prices anyway.

 

[Cruise04]

It may also have something to do with shipping prices they are being charged. A store in Timbucktwo may have one shipper for certain products from a certain regional zone and a store in Timbucktwoandyou, that is 10 miles away, may be in a different regional zone. So let's say zone 1 charges $25,000 for a truckload and zone 2 charges $30,000 what can they do? Some zones state you can only use X vendor for shipments.

I don't know if that is truly the case here but I know it happens.

 

[WDWorBUST]

They do this in our area and it pisses me off. Our local news station did a consumers alert type story about it on Wal-Mart. I live in the Tulsa, Oklahoma area. In south Tulsa which tends to be a more affluent area the price of baby formula was cheaper than in North Tulsa where it is a lot less affluent area. The people in north Tulsa are much more likely not to have a vehicle to go to another store and they are stuck paying more. It just makes me so angry.

 

[katerkat]

What monkeyboy said.

In our store, prices are set by corporate, as are sales. (IE, we can't just decide to have a sale.) But, some sales are based on what we have. If the store has an excess of PVDs or PVTs (previously viewed DVDs or tapes - our old rentals) we'll have a sale to get rid of them. One of the other stores in town (there are 4 of my chain) might not have an excess of PVD/Ts, so they won't be having the sale to get rid of them.

 

[WDWHound]

Walmart knows exactly what the demand is for each product they sell at any given hour at any given store, and their databases are updated in realtime. For example, at their corporate headquarters they can tell you how many bottles of Windex were sold at the Walmart in Round Rock Texas between 7 and 8 am this morning. They have people who do nothing but analyze this information and they set the prices by store or region based on that data.

In short, they know their customers at each and every store very, very well and will lower or raise their prices based on the habits of those customers. This is one of the main tools Walmart has used to achive the success it has.

 

[danacara]

Logistical software. They follow something called the "profit gradient", which basically means that they price to maximize the number of pieces sold times the net profit per piece.

This is an easy thing to draw on a piece of paper, but a little bit complicated to describe in words. The short answer is, we know that as Wal Mart increases the price, they make a greater profit per piece - if you graph it, it's a line going up. We also know that as they increase the price, the demand from customers like us drops - if you graph it, it's a line going down. Now generally speaking, in math, if you multiply the line going up with a line going down, you end up with a curve that looks like one bump on the back of a camel. Wal Mart is trying to get to the top of the bump, which is the price at which the product of demand and profit per piece is highest. In order to find the top of that bump, they need data, and in order to get data, they have to move the price around and experiment through time. They need to know that at price x, demand is a, and at price y, demand is b, given roughly the same location.

Now we can all think of simple examples of this, but humans aren't simple, and as you can imagine, this gets complicated fast. For example, the "demand line" (we usually call it a "demand curve") isn't smooth, because people are emotional buyers. They'll pay $99.99 much more easily than they'll pay $100. They'll pay $300 for a winter jacket in November, but only $200 for the same jacket in April. They'll pay $1 for one, but only $2.50 if it's packaged in threes. They'll pay $30 for a tee shirt in the women's department, but only $20 for it if it's in the men's department. They'll pay $10 for sunscreen on a sunny day, but only $5 if it's raining.

Walmart has an EXTRAORDINARY model that includes all of these factors, builds curves, multiplies out and finds the maximum (the hump of the camel). The math is absolutely out of control, and they have mathematicians and computer scientists on staff. It's these guys who figured out that on a national level, the golden price for a top 40 CD is $9.72. Have you seen the $9.72 CDs at Walmart? They are so sure that this is the key profit price that they are hammering the record companies to comply.