Thursday, December 04, 2003

Christmas Lights at Wal-Mart

Starting on Thanksgiving day, we have been putting up our Christmas stuff -- Christmas trees, Christmas ornaments, Christmas wreaths, and Christmas lights. The kids love this time of year, and so do I.

We have some lights on the tree and a couple of bulbs were burned out, so I went to Wal-Mart to buy some replacement bulbs. Wal-Mart will sell you a package of replacement bulbs like this for 67 cents:

(I actually bought this package at Home Depot for 84 cents so I could take the photo). You get 5 bulbs and 4 fuses in a little bubble package.

If you walk down the aisle, however, Wal-Mart will sell you a box containing a strand of lights for $1.54. The strand of lights is 29.5 feet long (9 meters) and it contains 100 lights. Inside the box you find: Plus the box itself. All of that is $1.54. (The same strand is $1.64 at Home Depot)

My first question is this. If Wal-Mart can sell you 102 bulbs, 2 blinker bulbs, 4 fuses, 100 sockets, 90 feet of wire, etc. for $1.54, why does Wal-Mart charge you 67 cents for 5 bulbs and 4 fuses? It feels like an intentional rip off. Think about it -- for $1.54 you can buy the strand, harvest 102 bulbs and 4 fuses and then throw away the wire. That's a penny and a half per bulb. Or you can get 5 bulbs for 67 cents. That's 13 cents a bulb, or 800% more per bulb. It's hard to find a bigger rip off than that.

You see that same kind of rip off with all sorts of things in all sorts of stores. Batteries are a classic example. You can buy a 4-pack of batteries at the check out counter for $3. But if you walk to the back of the same store to the electronics section you can buy 24 batteries for $7.

Why that huge disparity? It is not the cost of packaging -- the packaging for something like a pack of batteries costs a penny at most. It is not the cost of "stocking it" or "transporting it", because you have to stock and transport the 24-pack in just the same way you stock and transport the 4-pack. The 4-pack is simply a way for the store to rip you off.

The common response to question #1 is, "The consumer has a choice. The consumer can choose to buy the 4-pack, or can choose to walk to the back of the store to buy 24-pack." One implicit message in that response is "screw the customer." The other implicit message in that is, "Stores everywhere are intentionally setting traps all over the store to rip you off. Unless you walk around the entire store and investigate every possible place for batteries that might be selling at a better price, you will get ripped off." Any item you pick up might be available for a cheaper price somewhere else in the store. What if Wal-Mart has a 36-pack of batteries for $5 in the ladies lingerie section? How would you know unless you searched every nook and cranny of the store?

This leads to question 2, which is a simple one. Why do we want to shop in an environment where every merchant's implicit goal is to rip you off?

Question 3 is a question for Wal-Mart. This is Wal-Mart's logo from the Wal-Mart web site:

The Wal-Mart motto is, "Always Low Prices. Always." The dictionary defines "Always" as: "At all times; invariably".

If Wal-Mart has one place in the store where bulbs are selling for a penny each, how can it have another place in the same store where the same bulbs are selling for a dime each? If Wal-Mart has one place in a store that is selling batteries for 30 cents each, how can it have another place in the same store selling the same batteries for 75 cents each? The phrase "Always Low Prices. Always." means that if a battery is 30 cents at one point in the store, the same battery should be 30 cents throughout the store, regardless of the package size. That is what the word "Always" means. The cost of the packaging is, for all practical purposes, zero, so package size is irrelevant to the price. A 30-cent battery should always be 30 cents everywhere in a Wal-Mart store.

Question 4 is a personal one. Why do we, as shoppers, allow stores to rip us off like this? See this article for further discussion.

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