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Does Wal-Mart really save you money?

Steve Henn Nov 23, 2009

Does Wal-Mart really save you money?

Steve Henn Nov 23, 2009


Kai Ryssdal: We are, as of this Monday, just four short days away from Black Friday. That once-a-year, day-after-Thanksgiving spectacle where the American consumer really gets down to it. Only this year, though, like never before, retailers are fighting to position themselves as your allies in saving money.

Few national chains have been at that game longer than Wal-Mart has. And Marketplace’s Steve Henn reports the world’s biggest retailer is now claiming to save consumers cash, even if they don’t shop there.

STEVE HENN: If you watch TV, you’ve probably seen this ad.

TV AD: The family budget. In today’s economy nobody is more committed to helping family budgets go further than Wal-Mart. Wal-Mart saves the average family about $3,100 a year, no matter where they shop.

What?! OK, how can Wal-Mart save you money if you don’t shop there? Well, they say, other stores cut their prices to compete.

CHRIS HOLLINGS: The overall level of consumer prices are lower essentially anywhere you shop.

Chris Hollings is at IHS Global Insight.

HOLLINGS: So you do not actually have to shop at Wal-Mart to get these savings.

Hollings led the research Wal-Mart uses in its ad. He says by tracking Wal-Mart’s expansion, his team was able to isolate an economic Wal-Mart effect. Today he says prices for retail goods are 3.6 percent lower across the board because of the chain. But to save more than $3,000 a year a, quote, “average family” would have to spend more than $83,000 shopping.

CHARLES FISHMAN: This headline number is technically accurate but misleading.

Charles Fishman is author of the book, “The Wal-Mart Effect.” He points out that the median household income is less than $51,000.

FISHMAN: A family earning $51,000 a year saves about $640 a year compared to what they would otherwise have had to spend.

That’s a far cry from Wal-Mart’s claim. But…

FISHMAN: Six-hundred-forty dollars for a typical family still adds up to a TV, a big-screen TV that you wouldn’t otherwise get to buy, or two weeks at camp for a kid who wouldn’t otherwise get to go to camp. And so that’s not trivial. It’s a question of keeping it in perspective.

On the other side, the study showed Wal-Mart’s price cutting also held down wages.

In Washington, I’m Steve Henn for Marketplace.

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