The EDLP war has only just begun - everyday low prices, Wal-Mart and Kmart - Brief Article - Statistical Data Included

DSN Retailing Today, July 23, 2001 by Debbie Howell

Kmart's new BlueLight Always pricing strategy on fast-turning food and other consumable goods triggered rumors that a margin-squeezing price war was about to begin among the Big Three.

But with prices still a few pennies above Wal-Mart on some items, according to surveys by some analysts, it appeared the move was more akin to a marketing tactic than a wholesale shift in pricing strategy. Kmart has been attempting to carve out a niche as a destination for moms, kids and home as part of a larger repositioning effort to improve profitability. Though the addition of pantries with basic food items made sense in serving the targeted consumer, none of that mattered if the shopper perceived prices as too high.

Lowering prices on 15,000 items to constant "BlueLight Always" prices is, in essence, the same as everyday low pricing (EDLP). Kmart steers clear of calling the approach everyday low pricing even though it saw fit to use the word "always," which is a cornerstone of Wal-Mart's EDLP promotions and overall marketing. Meanwhile, on the majority of its items, Kmart remains committed to its promotional pricing strategy.

It will be interesting to see if Target joins the EDLP bandwagon as well, though it appears less likely given the chain is using food as a differentiator in its super-centers through an upscale gourmet approach.

Wal-Mart's EDLP strategy appeals to price-conscious consumers. It's these value shoppers who helped propel the company to its position as the world's largest retailer. Other discount chains, including Family Dollar, Dollar General and Duckwall-ALCO, have followed suit with their own versions of everyday low pricing on staple items such as juice, cereal, laundry detergent, toilet paper and the like. This pricing shift has gone over phenomenally well with low-income consumers in particular.

Given the current economic downturn, the launch of Kmart's BlueLight Always pricing strategy couldn't have been timed more perfectly. The chain will be able to increase shopper frequency with sharp price points on food items and build a more loyal shopper base.