Is EDLP going away?
The Business of Food
by Jennifer Barney
Is EDLP going away?
2-min read
Walmart, the nation’s largest grocer, has been known as an Every Day Low Price (EDLP) retailer since forever. Brands price differently for Walmart vs other retailers because of the “no dealing” business model.
But changes are afoot.
Walmart will soon allow offers as part of their loyalty program
Offers are automatic redemptions just like being “on sale”
Ibotta’s exclusive partnership with Walmart is a game changer for brands
At Walmart, products don’t go on sale (the few exceptions are called rollbacks, which most brands don’t qualify for). Walmart promises the lowest price, every day, to their shoppers. But now Walmart has entered into a deal with Ibotta, the leading online cash-back rewards platform, to offer promotional discounts to shoppers that will become fully integrated into the Walmart shopping site.
This is huge.
The new integration will allow all Walmart shoppers, regardless of if they use Ibotta or not, to see deals when they shop online at Walmart. Cash back will be instant and direct– you won’t have to upload a receipt to capture deals – and the cash will be available on customers’ Walmart accounts to be used only at Walmart.
Integrated deals right on the app impacts consumer behavior
Over half of consumers are members of loyalty programs and say it influences their purchase decisions. Loyalty program offers shift consumer perception from “this has a coupon” to “this is on sale” which increases trial. (Coupons typically require an extra step either at the cash register or post-purchase, which many shoppers don’t bother to take, whereas loyalty programs are frictionless, all you have to do is sign up.)
EDLP no more
Brands will have to promote and advertise, just like they do at their hi-lo retailers, to compete at Walmart. The only difference is the deals go through Ibotta, but the effect is consumers will be trained to hunt for online deals at Walmart just like they do at Safeway, making Walmart more like a regular grocer vs an EDLP mass merchandiser.
E-commerce is not going away
If you’re not prepared to activate an Ibotta program because you think e-commerce shopping is insignificant, think again. Ecommerce grocery shopping will hit 20% share by 2026. The growth is being driven by pick-up where shoppers shop online, then drive to the store to pick up their order. Also called click-and-collect, pick-up is profitable for grocers (vs delivery), shoppers like it, and Walmart took 25% share of the business last year.
Get ready to change your P&Ls
Your unit economics for Walmart will change commensurately. You’ll have spend directly tied to the retailer that you may have never had before, especially if you are new to digital couponing.
More shoppers, more data
Ibotta’s unique access to loads of verified purchase data, across shopper’s entire cart, is what brands desperately want for targeted marketing. And Ibotta’s insights team is ready to sell it to you.
More on this next week.
All my best,
Jennifer
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I'd love to hear from you - get in touch at jennifer@3rdandbroadway.com