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The EDLP invasion begins anew at Walmart

Product assortments have been restored, feature displays are back in most store aisles, and now Walmart is looking to restore sales growth with a new ad campaign beginning next month that reacquaints shoppers with the company’s core value proposition.

As Walmart U.S. president and CEO Bill Simon explained earlier this week at the Bank of America Merrill Lynch Consumer Conference, shoppers need to have the confidence that if they make the effort to drive to a Walmart store, walk across a large parking lot to shop in a large store they are going to find everything they came for, and then some, at the lowest overall price in the marketplace. And in those instances where a competitor has a lower price, Walmart will match the price at the checkout. No questions asked.

That is the premise of a television spot Simon share with those attending the investor conference in which a customer comments that another store had an item for 20 cents less than Walmart, which prompts the cashier to quickly make an adjustment to Walmart’s price.

“That’s the confidence that customers have to have in our business,” Simon said after showing the commercial. He conceded that high/low operators are going to play their pricing games, but added, “just let us know and we’ll take care of it right there, right then.”

A cameo appearance in the ad by American Idol judge Randy Jackson offers a hint that the spot is likely to run during the popular Fox television show.

Walmart has been talking to investors about a return to EDLP and touting its price guarantee in ads since Simon assumed his current position in a leadership shakeup last fall. However, as previously articulated to shoppers, the company’s low-price guarantee was a convoluted mess that sounded as if it were written by a team of lawyers. For example, the price guarantee was accompanied by qualifying verbiage that noted Walmart would match the prices of identical items featured in local competitors’ print ads. The verbiage remains, but with the new approach the manner in which the guarantee is communicated infers a less aggravating process for shoppers.

That is one piece of the puzzle Simon laid out. Other elements are fairly well documented at this point, but worth repeating. For example, Walmart intends to feature an opening price point in every category, and it will use in-aisle feature displays to demonstrate value and drive sales. Simon also indicated that the process of restocking stores following the elimination of 9% of SKUs the past few years remains a work in progress as some of the categories affect by the rationalization effort have longer lead times.

“The running joke used to be if we didn’t have it you didn’t need it,” Simon said, “and all too often what we were finding was people came in with 20 items on their list and left with 16. We’ve got to deliver a broad assortment. If we can make money on it and the customer wants it, we are going to carry it.”

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