Walmart is really good at getting people to spend money - they've picked up a few very
effective strategies in the 50-something years they've been in business. Trust us, resistance
is futile. Walmart will get your money, and here's how they do it.
Besides convenience, the big reason that so many people flock to Walmart to do their shopping
is for those low prices.
"All these beeps and boops and this is it?"
"That's it."
"Beep."
The prices for many items are posted on large signs throughout the store, and you've perhaps
noticed that they're not usually whole numbers. You'll pretty much never find anything that
costs an even $10.00. More often than not, they'll be odd-even numbers such as $7.82
or $29.93.
Sure, Walmart could round them up to whole numbers, but odd-even pricing in retail is
a powerful marketing tool that uses psychology to rake in more sales. Over 90 percent of
prices in advertisements are posted this way and it all has to do with how we read from
left to right. Because of this, the first digit in the price carries the most weight
in our minds and 8 dollars and change is going to seem like a better deal than $9, even if
there are only a few pennies between the two prices.
"Oh, great deal."
Walmart, of course, is hardly the only one using this pricing strategy, but it's a powerful
one and is pretty effective in getting shoppers to spend more money on what their eyes see
as a bargain.
Low prices are what Walmart has been pushing for decades now to win over consumers. Mom
and pop might have known the customer's name, but they just couldn't compete with those
everyday low prices. The slogan has changed over the years, the message is still the same.
Walmart wants to make sure customers know they're inside a low price paradise and drills
this message home by plastering the message all over the store. Maybe you only planned
on buying one pair of socks, but when the prices are so low, why not grab an extra pair?
That sort of in-your-face advertising can really seep into the subconscious of shoppers
and result in major sales profits.
The "everyday low prices" message also helps to create customer loyalty, which in turn
results in more sales. Walmart founder Sam Walton knew in the beginning that even if
he didn't make as much profit on a sale as his competitor, if he offered the item at
a lower price, he'd eventually beat them with the sheer volume of sales. Yes, Walmart might
have some shady ways of securing those low prices, but it's one of their oldest tactics
for getting customers to spend more money and it's still working today.
What's the one thing better than everyday low prices? Why that would be even lower prices,
of course, and that's just what Walmart wants you to believe they're doing with "rollback"
prices. These items are generally only sold at the rollback price for a certain period
of time and this provides extra incentive for the customer to grab the item while it's
marked down.
Former CEO Greg Foran said in 2016 that when a rollback goes into effect it's usually with
a sales drop, but because of the lower price, Walmart is confident that customers will spread
the word and unit sales will increase. The strategy is that Walmart's customers know
the rollback is only temporary, and it creates a sense of urgency that results in more sales.
This rollback sales strategy hasn't always sat well with customers, however, and has
even resulted in lawsuits that alleged Walmart uses it to mislead shoppers.
It's probably safe to assume that nobody visits Walmart just to soak up the tunes they're
playing over the store's speakers. Even still, it's no accident that Walmart has music playing
while you shop. It's all in an effort to sway you to spend a little more time filling up
your cart.
The practice of playing music to keep people in stores and shopping is nothing new. Studies
on it date back as far as the 1960s. Malls and different retail stores can buy selected
playlists that fit the vibe of their target customer, but Walmart takes things a step
further - they have actual DJs.
“Hey we're your Wal Mart radio Djs, I'm Antonio!"
"And I'm Bo and we're the guys that you hear when you're working or you're shopping."
That's right, maybe you haven't noticed, but Walmart radio has its own DJs who remind customers
of store specials between different songs. So not only is the music at the perfect volume
and tempo to keep people shopping, but customers are bombarded with deals and specials that
are just too good to pass up.
Walmart has had as many as six different store sizes, and its sprawling Supercenters can
be as large as 260,000 square feet. Getting in and out of these massive stores with a
single item is nearly impossible, and that's very much due to the store's layout. Items
that everyone needs like bread, toilet paper and milk are what 24/7 Wall St calls 'traffic
builders' and they're always going to be in the back of the store.
Yes, it's frustrating, but it's all part of Walmart's strategy. Walmart is banking on
customers stopping along the way to check out some of the other 80,000 items available.
The store's layout is even designed to set shoppers on a counter-clockwise shopping path
because the chain discovered this results in people spending $2 more.
Walk through Walmart's doors and you'll find yourself on one of the store's central paths
with aisles of goods on both sides. In the middle of your pathway, though, you'll also
see various pallets of goods. Walmart's name for this is Action Alley and it's a prime
way for the brand to showcase certain items.
As pointed out in the book The Walmart Effect, the pallet method in Action Alley allows Walmart
to showcase items with minimal effort. The shrinkwrap is removed, a price sign is placed
on top, and it's good to go. Other times, the products might just be inside a bin for
shoppers to stop and look through. The merchandise that finds itself in Action Alley is often
seasonal, and because it's in the middle of the store's central aisles, customers have
no choice but to walk by the sales displays.
Walmart discontinued the practice in 2009 to free up more aisle space for customers,
but it was brought back just a year later. Action Alley's sales success has been just
too good for Walmart to abandon. The promotions guide shoppers deeper into the store to help
create an impression that even more Action Alley deals await them further down the aisle.
No business wants its customers to buy a product and return it. Retail businesses do, however,
want customers to believe they can buy a product and return it without much hassle if they
wish. If a store wants to increase its sales, offering an easy and often lengthy return
policy has proven to be an effective method.
If the customer knows they can buy something and then easily return it, they're more likely
to put that item they're a little unsure about in their cart. It's a pretty nifty sales tactic
that incorporates some psychology to sway the customer into buying more.
In 2017, Walmart announced that it was streamlining its returns process by allowing customers
to bypass the returns counter through its mobile app. Walmart amped up the appeal of
its returns process even more by announcing that certain items purchased online may not
even need to be returned at all.
This might seem like it would cost Walmart money, but that's not always the case. Typically
retailers have losses when they have to absorb the shipping cost of returns, so Walmart can
save money by not even dealing with it.
Despite the fact that 90 percent of the US population lives within 10 miles of a Walmart,
some people simply don't like to shop at the retail megastores. For many younger shoppers,
going into a giant store for only one or two items is just too much trouble.
"It's aimed at younger Amazon shoppers who don't like to wait in line."
"It'd be a huge time saver."
"Mm-hmm. You like the idea?"
"Yeah."
Walmart's main solution for getting the business of those customers is its curbside pick up.
Walmart isn't the only store doing curbside pickup, but it's ahead of the pack and hopes
to offer the service to customers at over 3,000 stores by the end of 2020. Not surprisingly,
Walmart's whole strategy with its curbside service is to convince shoppers to spend more
money through sheer technological convenience.
Walmart has seen big sales results by making their pickup option as convenient as possible.
The company saw a 39 percent increase in pickup sales from 2018 to 2019 and a whopping 82
percent of shoppers make extra purchases while picking up their online orders.
Not every aspect of Walmart's strategy for squeezing out a few extra dollars from customers
involves technology or strategic pricing. Similar to the appeal of playing music over
the store speakers, Walmart knows how to appeal to your other senses, too. In regards to your
sense of smell, it's all about the bakery.
The grocery business has been very good for Walmart's sales and accounts for 56 percent
of its revenue. And a key component for creating the right environment for so many of those
grocery sales is the store's bakery section. According to the American Bakers Association,
the smell of baked goods encourages an emotional connection and creates a welcoming shopping
environment that helps to boost sales. This is the primary reason that Walmart and so
many other grocery stores place the bakery at the front of their stores.
It's awfully hard to resist the smell of freshly baked bread and walk past those tables of
pies, cookies, and cakes. The allure of the in-store bakery results in some grocery shoppers
purchasing those indulgent items not in the center aisles, but while browsing through
the in-store bakery.
As you've probably gathered, Walmart's mobile app has been a game-changer. In 2019, Walmart
surpassed the mighty Starbucks as the most popular mobile pay app with 58 million downloads.
The retail giant has engineered its app to be as convenient as possible for the shopper
to use, and the returns have yielded impressive sales results.
One of the most popular features of the app was its "Savings Catcher" function that was
basically a price matching tool. If users found a cheaper price someplace else, Walmart
would refund them the difference.
The Savings Catcher is merely an example of how Walmart has used its app to drum up sales.
There's also the app's "Search My Store" function that allows customers to search for an item
and instantly find its aisle location or simply add it to their cart for curbside pick up.
The app's features seem to be working, too. According to Walmart's vice president of digital
marketing, Wanda Young, people with the app visit the store twice as often as those without
it and spend 40 percent more.
No other retail store in the United States carries more under one roof than Walmart,
and the company is betting on its customers walking out with more than what was on their
shopping list.
"And they also create this kind of maze, to get to the cash register right? So you're
passing all these goodies like the lipgloss, and the candy and the magazines."
These extra unplanned purchases are what's known in the retail business as 'impulse buys,'
and consumers make around three impulse buys a week. Walmart has, of course, mastered the
impulse buy in every way, shape, and form. For example, Walmart places batteries in toy
aisles to help spur an impulse purchase. Sure, you might think you have batteries at home,
but Walmart's hoping you'll grab a pack... just in case.
Walmart puts a lot of effort into securing those impulse buys, too. According to Forbes,
Walmart has an innovation center just for the purpose of developing impulse buy products.
If it seems like shopping carts these days are bigger than you remember them being when
you were a kid, there's a good reason for that. They most certainly are bigger. According
to Taste of Home, the average size of the shopping cart has tripled in size from what
it was in the 1970s.
As Consumerist points out, one reason for the size increase is because a bigger cart
is often needed for the larger items that stores like Walmart and their sister store
Sam's Club sell. That said, the larger carts also result in customers spending more money
in the store. One study found that larger carts increase shopper spending by as much
as 40 percent.
If you're really wanting to avoid those impulse buys and get out of Walmart without buying
more than you planned, ditching the cart and opting for a shopping basket could be your
best bet.
The bigger is better method that Walmart uses isn't the only way its shopping carts could
help the company turn a profit. Walmart is also working on shopping cart technology that,
in the future, could result in you spending more money. Prepare yourself, this tech is
kinda creepy.
In October 2018, Walmart submitted a patent for something called "System and Method for
a Biometric Feedback Cart Handle." Oooh, fancy. Well, essentially it's a data collection shopping
cart handle that would read your heart rate, temperature, and stress levels while shopping.
Y'know, stuff that your doctor would be curious about, but that Walmart has no business knowing.
Walmart reportedly said it's all in the name of customer safety so that if a customer was
unwell an associate could check on them. How very caring of Walmart. This biometric data
could easily be used for sales strategies. Let's say a display of new TVs catches your
eye and your heart rate jumps ever so slightly. Walmart could plug that data in and then send
a push notification to your mobile app when those TVs go on sale.
Then again, giant corporations always have the best interest of the general public in
mind, right?
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