Walmart Undercuts Rivals in Back-to-School Battle

BusinessWeek
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Walmart Stores (WMT) is emerging as the pricing bully in this year’s back-to-school shopping game. Its U.S. locations are already fully stocked with crayons, crates, stationery, and pencil sharpeners in school-shopping displays, and a new analysis from Bloomberg Industries found prices 10 percent cheaper on average than similar wares at Target (TGT).

The gap between Walmart and Target, its nearest rival in terms of price, looks like parity compared with Walmart’s drastic discounts over other major retailers vying for back-to-school revenue. The report, based on shopping for a basket of about 50 identical goods, put Walmart’s prices 50 percent lower than those at Sears (SHLD)-owned Kmart stores and 45 percent lower than Staples (SPLS).

It’s enough to suggest that, in some cases, retail rivals aren’t even trying to fight Walmart’s mighty pricing powers. Kmart didn’t have a dedicated back-to-school area when Bloomberg analysts made their rounds earlier this month, but the chain is pitching its layaway plan and temporarily waiving its $5 sign-up fee.

Target and Walmart prices were much more closely matched in similar studies last year, with Target holding the edge as the cheaper option at one point in the summer. The back-to-school pricing battle, while comparable to other seasonal shopping events, holds particular sway over shoppers’ perceptions of retail brands. “It’s huge for these companies,” says Bloomberg analyst Poonam Goyal. “And it’s really about positioning themselves in the minds of the consumer.”

Consumers this year seem particularly focused on thrift: The average back-to-school shopper is expected to spend 8 percent less on school items this season, roughly $635 each, according to a recent study by the National Retail Federation.

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