Higher Prices, Low Prices

Though Wal Mart might not have been the most sleek, sophisticated retailer in America, it was the hottest, biggest retail deal to roll into these small towns. And though Wal Mart didn’t set off fireworks and employees didn’t march around in strange makeup, Wal Mart did generate as much buzz and fervor among its fans with its everyday low prices (EDLP) strategy, offering consumers consistent, low prices every day, every time they shopped. Competitors usually employed high low pricing, in which a particular item acts as a loss leader one day (to entice customers into the store to pay full price for everything else) and is full price the following day. Customers began seeing WalMart as their friend in an environment where most other stores faced rising expenses and tried to pass them on to customers in the form of higher prices. Low prices and value remain an important brand proposition for Wal Mart, which today uses the phrase “Always Low Prices” in its tagline.

The ultimate goal, however, was to enter larger suburban markets. First circling cities with a ring of stores in surrounding small towns, Wal Mart would then gradually build newer locations closer and closer to the target city. Incrementally, Wal Mart grew both in size and in operating efficiency, and by the early 1990s, its total sales were greater than those of the Goliaths who had previously ignored the little David from Bentonville and the markets they deemed too small.

Wal Mart continues to penetrate further into target markets, marching from conquered suburbs into larger cities. This type of expansion is forcing a new twist-going from stores so large that some customers have requested benches so they can rest during shopping sprees to a smaller, neighborhood market concept with less space and stock keeping units (SKUs) than in rural and urban locations.