The premise: A shopper sets up an account on Walmart.com, types in the number on their store receipt, and the Savings Catcher tool compares prices of every item on the receipt to a database of advertised prices of competitors. If a competitor's price is lower than Walmart's for certain product(s), Walmart will credit the shopper the difference in price. The savings are issued on a Walmart online gift card, and the customer can accumulate savings or use the credit immediately, either online or in the store by printing out the gift card receipt.
But the Walmart Savings Catcher tool is more than just a neat "cash back" offering. It is a newly realized personalized promotion and price intelligence strategy that is rewriting the rules of the "Who Can Beat Amazon" game by reassuring in-store customers that they do indeed offer the lowest price overall. By doing so, customer satisfaction is bound to increase because it eliminates the need and hassle for shoppers to conduct individual product price checking and in-store matching. What's more, this type of price rebate/gift card notification strategy offers personalized savings, unique to the customer, incenting repeat shopping. It also provides Walmart with more pricing flexibility with those repeat shoppers than traditional price matching.
The cherry on top: It takes price matching from a win-lose for customer and retailer to a win-win situation.
For the rest of the retail industry, it is also a clear sign that in-store retailers can compete with the dynamic pricing strategy of their online competitors. According to Duncan MacNaughton, Walmart's chief merchandising and marketing officer for its U.S. discount division, preliminary data shows that in the markets offering the Savings Catcher tool, shoppers are "putting more items in their basket and the checkout lines are faster because people don't feel like they have to pull out their smartphones or circular ads to check prices."
Looking at the bigger picture: In-store retailers that implement new and effective ways (like the Savings Catcher tool) to compete with online retailers, can play their own pricing game without the cost and challenges of in-store dynamic pricing
Give A Little and Get a Lot in Return
The strategy, even with its initial limited scope, is a brilliant defensive and offensive marketing move for Walmart and could be just be the key to entice more of its in-store customers to shop online at Walmart.com instead of via Amazon. According to a new report by UBS, only 19% of Walmart in-store shoppers shop at Walmart.com, compared to 53% of those who buy at Amazon.com.
This new strategy also allows the retailer to move with their customers as their shopping patterns go increasingly online across different categories. This is especially true for grocery and personal care.
The Savings Catcher tool, clearly a unique approach to personalized offers that should be getting the attention of other retailers, also has the potential to double as a successful customer loyalty program. Even though the initial phase of the Savings Catcher tool only includes grocery-related items, Walmart expects a significant amount of shoppers to migrate online and enter their purchased information in order to take advantage of the cash-back program.
The upside for Walmart is that it now has a wealth of in-store customer data, before anyone else, to see exactly what items certain customers are buying and to "refine its value proposition and localized strategies," according to Carol Spieckerman, CEO of NewMarketBuilders. The possibilities are endless with access to this type of customer data, such as making predictive shopping lists for specific customers or rollback alerts on items it knows a specific shopper regularly purchases. (The Walmart strategy could also help neutralize the replenishment patent threat from Amazon.)
The notion of "give a little, and get a lot in return" is amplified with the Walmart Savings Catcher tool because redemption rates for most cash back programs are typically less than 100%. This allows Walmart to offer discounts without incurring the full cost of these discounts or having to lower prices across the board.
Retail organizations are constantly looking for ways to operate in a price transparent world and to compete with Amazon and other online retailers. Those that adopt price intelligence strategies similar to the Savings Catcher (i.e. reducing the amount of direct price matching) are technically blurring the lines, but only to assure their customers that they are getting the best price. The result is that retailers can increase in-store sales, successfully compete with Amazon and other competitors in the online channel, and most importantly, protect and increase customer loyalty.
Jenn Markey is VP of marketing at 360pi, a company that offers price intelligence solutions to enable retailers to optimize strategies by monitoring competitors' prices.