Walmart sells groceries with thin margin in hopes of getting you to buy [censored] like clothes and all the other stuff in store with big markups while you are in the store. Same thing for motor oil or a gallon of milk, you walk all the way to back of store to get the jug and odds are you'll end up buying other items in the Walmart with large markup. Works for Walmart...when you walk out the door..they're making a profit on you on average!
Does wally world sell motor oil at a loss?
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Originally Posted By: demarpaint
I'm certain they are making money on me, straight up retail the price for that deal is almost double.
Yep; retail is retail...whether it's an auto parts store, a TV store, a supermarket, etc.
Great example is a local chain of supermarkets called Harris Teeter. It's generally viewed as a pretty upscale store, and I used to be of the opinion that we didn't make enough money to risk being seen in one! But we started looking at sales flyers and coupon policies (they double all coupons up to $1). Then we actually did go in one recently, and found they had a fair amount of "buy 2 get 3 free" deals. For the price of 2 jars of pasta sauce, you get 5. Deal. They recently had that on boneless/skinless chicken breasts. Buy 2, walk home with 5. So we stocked up. The game is to wait for the sales, stack coupons on top of sales, and go home a winner. The average joe who walks in "off sale sequence" and buys one jar of Classico spaghetti sauce and a box of Cheerios will pay retail. But a price-savvy shopper can make the game work for them. The store may make very little (or no) profit on those few savvy shoppers, but the profit they make on the rest of the shoppers more than makes up for it.
Walmart was one of the first retailers to move to a "low price always" scheme, but wasn't the first. Few realize he got many of his ideas from the already successful Meijer chain in Michigan (which was the first supercenter store chain). Walmart doesn't have "sales", and they don't double coupons. They offer a relatively low price on everything they sell, keep costs down, and leverage their size and structure to their logistical advantage.
Those who say that shopping at Walmart saves you money are right. Those who say that shopping at Walmart is more expensive are right. They're both right, but it depends on the purchase. A price-savvy shopper who clips coupons and reads the weekly ads in the paper can save quite a bit of money by going to the local supermarket who runs sales and who doubles coupons and offers rewards to store card holders. The "average joe" noted above who simply buys the brand he wants to buy and when he wants to buy it will spend less at Walmart, because that item is not likely to be on sale on any particular day at the local supermarket.
It's two very different retail structures set up to appeal to two very different types of shoppers. Walmart's pricing structure will appeal to those who are too busy (or too lazy) to read ads or to clip coupons. A store like Harris Teeter will appeal to those customers who want to clip coupons and do the weekly sale ad thing.
Both likely sell items at a loss sometimes. That's part of retail. Does Walmart sell motor oil at a loss? I doubt it, but it's likely somewhat close to cost. The items that are large generators of profit are sold in enough quantity that motor oil can be sold at a nominal margin.
I'll bet the motor oil is closer to cost, by the way, than the filters are.
I'm certain they are making money on me, straight up retail the price for that deal is almost double.
Yep; retail is retail...whether it's an auto parts store, a TV store, a supermarket, etc.
Great example is a local chain of supermarkets called Harris Teeter. It's generally viewed as a pretty upscale store, and I used to be of the opinion that we didn't make enough money to risk being seen in one! But we started looking at sales flyers and coupon policies (they double all coupons up to $1). Then we actually did go in one recently, and found they had a fair amount of "buy 2 get 3 free" deals. For the price of 2 jars of pasta sauce, you get 5. Deal. They recently had that on boneless/skinless chicken breasts. Buy 2, walk home with 5. So we stocked up. The game is to wait for the sales, stack coupons on top of sales, and go home a winner. The average joe who walks in "off sale sequence" and buys one jar of Classico spaghetti sauce and a box of Cheerios will pay retail. But a price-savvy shopper can make the game work for them. The store may make very little (or no) profit on those few savvy shoppers, but the profit they make on the rest of the shoppers more than makes up for it.
Walmart was one of the first retailers to move to a "low price always" scheme, but wasn't the first. Few realize he got many of his ideas from the already successful Meijer chain in Michigan (which was the first supercenter store chain). Walmart doesn't have "sales", and they don't double coupons. They offer a relatively low price on everything they sell, keep costs down, and leverage their size and structure to their logistical advantage.
Those who say that shopping at Walmart saves you money are right. Those who say that shopping at Walmart is more expensive are right. They're both right, but it depends on the purchase. A price-savvy shopper who clips coupons and reads the weekly ads in the paper can save quite a bit of money by going to the local supermarket who runs sales and who doubles coupons and offers rewards to store card holders. The "average joe" noted above who simply buys the brand he wants to buy and when he wants to buy it will spend less at Walmart, because that item is not likely to be on sale on any particular day at the local supermarket.
It's two very different retail structures set up to appeal to two very different types of shoppers. Walmart's pricing structure will appeal to those who are too busy (or too lazy) to read ads or to clip coupons. A store like Harris Teeter will appeal to those customers who want to clip coupons and do the weekly sale ad thing.
Both likely sell items at a loss sometimes. That's part of retail. Does Walmart sell motor oil at a loss? I doubt it, but it's likely somewhat close to cost. The items that are large generators of profit are sold in enough quantity that motor oil can be sold at a nominal margin.
I'll bet the motor oil is closer to cost, by the way, than the filters are.
Originally Posted By: TomYoung
Originally Posted By: cascivic
because walmarts whole philosophy is not too have sales
EDLP(every day low price)
rollbacks are long term "sales" when they have economized in concert with the vendor on that particular product.
None of which prevents selling at or below cost.
correct...but loss leaders are not as prevalent at walmart as people are making them out to be. If you take the 4th quarter holiday front page stuff out of the mix, Ive only really seen it when competing vs someone elses "loss leader" and occasional front page ad things during the rest of the year.
my only basis on knowing this is working for walmart for 10 years from when i graduated high school thru college(starting in the auto dept) up to being a co manager of a store
If you want specifics on a type i can try to snag a telxon next time i go visit and scan a few bottles to see what the markup is
Originally Posted By: cascivic
because walmarts whole philosophy is not too have sales
EDLP(every day low price)
rollbacks are long term "sales" when they have economized in concert with the vendor on that particular product.
None of which prevents selling at or below cost.
correct...but loss leaders are not as prevalent at walmart as people are making them out to be. If you take the 4th quarter holiday front page stuff out of the mix, Ive only really seen it when competing vs someone elses "loss leader" and occasional front page ad things during the rest of the year.
my only basis on knowing this is working for walmart for 10 years from when i graduated high school thru college(starting in the auto dept) up to being a co manager of a store
If you want specifics on a type i can try to snag a telxon next time i go visit and scan a few bottles to see what the markup is
so you know the inside. tell me if i'm wrong, but i don't think loss leaders are true at all, except in the sense they are losing vs. the retail price. The lowest they go is cost + 20% or higher for everyday items. when i did business with retail (it was longs drugs not walmart) they wanted to make 80-100% profit on all items in the store. Employees might have an idea if they have a cost + 10% or 20% employee discount.
Walmart is entirely different as they do have lower profit margins and squeeze vendors for the lowest possible wholesale prices
Walmart is entirely different as they do have lower profit margins and squeeze vendors for the lowest possible wholesale prices
Why would Walmart sell motor oil at a loss?
Many people, like me, rarely buy anything else at Walmart, so I doubt that Walmart sees motor oil as a profitable traffic generator.
FWIR, Walmart is the highest volume motor oil retailer in the world, so it can take huge volumes from the blenders.
Walmart's volume is also achieved at regular prices, since Walmart rarely runs specials on anything.
Walmart therefore can probably contract to take enormous volumes of product on a consistent basis, giving it bargaining power with blenders. If a company won't play, there are always other oils to offer.
Check out the fully stocked shelves of motor oil in any Walmart early on a weekend morning, and then look again in the last afternoon. Most Walmarts move some serious quantities of motor oil, so they do just fine on high volumes and lower markups.
Many people, like me, rarely buy anything else at Walmart, so I doubt that Walmart sees motor oil as a profitable traffic generator.
FWIR, Walmart is the highest volume motor oil retailer in the world, so it can take huge volumes from the blenders.
Walmart's volume is also achieved at regular prices, since Walmart rarely runs specials on anything.
Walmart therefore can probably contract to take enormous volumes of product on a consistent basis, giving it bargaining power with blenders. If a company won't play, there are always other oils to offer.
Check out the fully stocked shelves of motor oil in any Walmart early on a weekend morning, and then look again in the last afternoon. Most Walmarts move some serious quantities of motor oil, so they do just fine on high volumes and lower markups.
Originally Posted By: [RT
ProjUltraZ] so you know the inside. tell me if i'm wrong, but i don't think loss leaders are true at all, except in the sense they are losing vs. the retail price. The lowest they go is cost + 20% or higher for everyday items. when i did business with retail (it was longs drugs not walmart) they wanted to make 80-100% profit on all items in the store. Employees might have an idea if they have a cost + 10% or 20% employee discount.
Walmart is entirely different as they do have lower profit margins and squeeze vendors for the lowest possible wholesale prices
No loss leader like lose money on every item you sell. I've seen products either Black Friday TVs or a competitive issue come up on the gun in the negative percent . Walmart a employee discount is 10% and back in my time the store average was in the mid to high 20% overall markeup
ProjUltraZ] so you know the inside. tell me if i'm wrong, but i don't think loss leaders are true at all, except in the sense they are losing vs. the retail price. The lowest they go is cost + 20% or higher for everyday items. when i did business with retail (it was longs drugs not walmart) they wanted to make 80-100% profit on all items in the store. Employees might have an idea if they have a cost + 10% or 20% employee discount.
Walmart is entirely different as they do have lower profit margins and squeeze vendors for the lowest possible wholesale prices
No loss leader like lose money on every item you sell. I've seen products either Black Friday TVs or a competitive issue come up on the gun in the negative percent . Walmart a employee discount is 10% and back in my time the store average was in the mid to high 20% overall markeup
Originally Posted By: fdcg27
Walmart's volume is also achieved at regular prices, since Walmart rarely runs specials on anything.
Up here it's a little different. WM's regular pricing on oil is atrociously high. Pretty much every week, however, they roll back one or two examples very deeply. Normally, something like PP is north of $40 for 5 L. Then, they'll bring in some 4.73 L jugs and sell them for $19.99. Or, PYB normally sells for something like $24.88 in the 5 L jug. They'll bring in the 4.73 L of that, and sell it for $11.88 to $13.88, depending upon how generous they feel.
And, if you find one of the 4.73 L jugs, even if the sale is officially over, it will still scan at the last low price. You grab the 5 L jug, you pay full price, sale or not. The 4.73 L jug is the low price, sale or not.
Walmart's volume is also achieved at regular prices, since Walmart rarely runs specials on anything.
Up here it's a little different. WM's regular pricing on oil is atrociously high. Pretty much every week, however, they roll back one or two examples very deeply. Normally, something like PP is north of $40 for 5 L. Then, they'll bring in some 4.73 L jugs and sell them for $19.99. Or, PYB normally sells for something like $24.88 in the 5 L jug. They'll bring in the 4.73 L of that, and sell it for $11.88 to $13.88, depending upon how generous they feel.
And, if you find one of the 4.73 L jugs, even if the sale is officially over, it will still scan at the last low price. You grab the 5 L jug, you pay full price, sale or not. The 4.73 L jug is the low price, sale or not.
I had a buddy that was the manager at WM for several years. He said that they have such a market share that they can purchase at a low price in order to outsell the competition.
He also said they would sometimes sell at a break-even or slight loss to get interest started on some things...but to make up for it would raise the price on other items to make up the loss.
I'd speculate that this is why WM is dropping some synthetic oils from their shelves (See BITOG thread) They never took off enough to charge enough for some bean counter in management to be happy.
He also said they would sometimes sell at a break-even or slight loss to get interest started on some things...but to make up for it would raise the price on other items to make up the loss.
I'd speculate that this is why WM is dropping some synthetic oils from their shelves (See BITOG thread) They never took off enough to charge enough for some bean counter in management to be happy.
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Originally Posted By: Gabe
I disagree. Walmart MUST sell their oil at a profit loss.
Retailers will take a profit loss on certain items with the hopes of selling other more profitable items. CVS has milk for $1 after extra bucks; Mitas has a free safety inspections on all cars; Walmart Tire Express will fix an TPMS flat for $10. The retailer hopes that you will get a box of $6 Capt'n Crunch, add on a brake job, or spend an 90 minutes shopping while your tires are off.
I admit it: I will walk into Meijer to grab a jug of M1 EP and walk out with a cart load of stuff.
Not necessarily true.
Some states have minimum markup laws. These laws were passed many years ago to try and prevent giant companies like Walmart and Kroger from coming into a small town and under-pricing to such an extent that they put the local Mom & Pop stores out of business. The laws have been largely ineffective because of the fact that the large companies like Walmart buy many products factory direct and in such huge quantities that they can price them at retail prices much lower than the Mom & Pop stores can actually buy the very same products from wholesale distributors for. Some states are so anti-Walmart that they watch Walmart's markups very closely, so it is doubtful that they regularly sell anything at a loss.
Written into most of these laws, there are generally two ways that a store can legally get around the minimum markups... you can sell something under cost if it is marked as a clearance item, and you can offer rebates.
I disagree. Walmart MUST sell their oil at a profit loss.
Retailers will take a profit loss on certain items with the hopes of selling other more profitable items. CVS has milk for $1 after extra bucks; Mitas has a free safety inspections on all cars; Walmart Tire Express will fix an TPMS flat for $10. The retailer hopes that you will get a box of $6 Capt'n Crunch, add on a brake job, or spend an 90 minutes shopping while your tires are off.
I admit it: I will walk into Meijer to grab a jug of M1 EP and walk out with a cart load of stuff.
Not necessarily true.
Some states have minimum markup laws. These laws were passed many years ago to try and prevent giant companies like Walmart and Kroger from coming into a small town and under-pricing to such an extent that they put the local Mom & Pop stores out of business. The laws have been largely ineffective because of the fact that the large companies like Walmart buy many products factory direct and in such huge quantities that they can price them at retail prices much lower than the Mom & Pop stores can actually buy the very same products from wholesale distributors for. Some states are so anti-Walmart that they watch Walmart's markups very closely, so it is doubtful that they regularly sell anything at a loss.
Written into most of these laws, there are generally two ways that a store can legally get around the minimum markups... you can sell something under cost if it is marked as a clearance item, and you can offer rebates.
Originally Posted By: Gabe
I disagree. Walmart MUST sell their oil at a profit loss.
Retailers will take a profit loss on certain items with the hopes of selling other more profitable items. CVS has milk for $1 after extra bucks; Mitas has a free safety inspections on all cars; Walmart Tire Express will fix an TPMS flat for $10. The retailer hopes that you will get a box of $6 Capt'n Crunch, add on a brake job, or spend an 90 minutes shopping while your tires are off.
I admit it: I will walk into Meijer to grab a jug of M1 EP and walk out with a cart load of stuff.
Disagree all you want, but Wal-Mart does not overall sell oil as a planned loss leader. Everything in that store to include oil has to earn it's keep on the shelf space it occupies.
I disagree. Walmart MUST sell their oil at a profit loss.
Retailers will take a profit loss on certain items with the hopes of selling other more profitable items. CVS has milk for $1 after extra bucks; Mitas has a free safety inspections on all cars; Walmart Tire Express will fix an TPMS flat for $10. The retailer hopes that you will get a box of $6 Capt'n Crunch, add on a brake job, or spend an 90 minutes shopping while your tires are off.
I admit it: I will walk into Meijer to grab a jug of M1 EP and walk out with a cart load of stuff.
Disagree all you want, but Wal-Mart does not overall sell oil as a planned loss leader. Everything in that store to include oil has to earn it's keep on the shelf space it occupies.
Agree, loss leader and WalMart are mutually exclusive terms.
I would venture that their margin is a little lower than average but WalMart buys a LOT of oil and has presence in....
virtually every market in the United States, as well as Canada and Mexico. If you are a major manufacturer like SOPUS, you want your product on WalMart's shelves. If you want it on WalMart's shelves, you have to play by WalMart's pricing rules.
I would venture that their margin is a little lower than average but WalMart buys a LOT of oil and has presence in....
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