NAD Finds Wal-Mart Can Support ‘Unbeatable Prices’ Claim, but Recommends it discontinue ‘Annual savings’ Claim

 

New York, NY – June 22, 2009 – The National Advertising Division of the Council of Better Business Bureaus has determined that Wal-Mart Stores, Inc., provided reasonable support for the company’s “Unbeatable Prices,” advertising claims, but recommended the retailer modify the accompanying disclosure.  Further, NAD recommended the advertiser discontinue an “annual savings” claim.

 

NAD, the advertising industry’s self-regulatory forum, examined Wal-Mart advertising claims following a challenge by H-E-B Grocery Company, L.P., a competing food and drug retailer.  Claims at issue included:

 

• “Unbeatable Prices” (along with the disclosure: “We’ll match the price of any local competitor’s printed ad for an identical product.  See manager for restrictions.”) The claim was featured on in-store signs and in television, radio and print advertising.

 

• “Let’s say you spend $100 a week at the supermarket on these kinds of items.  If you bought these kinds of groceries at Wal-Mart, you could save on average over $700 a year.  What would you do with all that money?  Save money.  Live better.  Wal-Mart.”  The claim appeared in television and print advertising.

 

The challenger argued that consumers understand Wal-Mart’s “unbeatable prices” signage to be a lowest price claim and argued that the disclaimer fails to reveal several significant limitations. Specifically, the challenger noted that Wal-Mart does not honor advertisements that require a purchase in order to receive the advertised price or free product, “Buy One/Get One Free” advertisements, double or triple coupons or percent off advertisements,  “misprinted” advertised prices, Internet prices or price matches based on other methods of proof, including sales receipts.

 

The challenger also took issue with the advertiser’s $700 savings claim. The challenged commercial features a shot of packaged grocery items and a voiceover that states “let’s say you spend $100 a week at the supermarket on these kinds of items,” while a disclosure at the bottom of the screen reads, “Excludes fresh meat and produce.”  The voiceover then states, “if you bought these kinds of groceries at Wal-Mart, you could save on average over $700 a year.” A second disclosure, lasting four seconds, appears directly below the packaged goods and states that the claim is based on the “8/15/08 Global Insight, Inc. U.S. Cost Comparison Study based on 2007 sales of packaged foods by category; excludes meat, produce & other random weight items. Local savings vary.”

 

 

Following its review of the evidence in the record, NAD determined that the advertiser could support its “Unbeatable Prices” claim.  NAD noted that all price-matching programs have terms and limitations, many of which cannot reasonably be expected to be listed in a disclosure. NAD did recommend, however, that the advertiser modify its advertising to make its disclosures substantially more clear and conspicuous in its printed and broadcast advertising and on its in-store signage.

 

NAD further recommended that Wal-Mart discontinue the “$700 annual savings” claim. NAD noted that that the claim suggests that the consumer watching the ad could save, on average, more than $700 a year by shopping at Wal-Mart. The use of the phrase “on average” does not temper the overriding message that the viewer – wherever he or she is located – can expect to obtain these savings.

 

NAD determined that the message is unchanged by the super that appears briefly at the bottom of the screen, which reads: “8/15/08 Global Insight, Inc. U.S. Cost Comparison Study based on 2007 sales of packaged foods by category; excludes fresh meat, produce and other random weight items. Local savings vary.”

 

“The statement, ‘[l]ocal savings may vary,’ does not dispel the overriding impression that ‘you’ the viewer can obtain the suggested savings,” NAD noted.

 

Wal-Mart, in its advertiser’s statement, said the company disagreed “that our $700 grocery savings claim was not adequately substantiated. Although we are not currently running this particular spot, we firmly believe that this claim is well-supported by the Global Insight study, and that the advertising clearly communicated the claim and the basis for the claim.”

 

Nevertheless, the company said, it will take “NAD’s recommendations regarding these claims into account in future advertising.”

 

NAD's inquiry was conducted under NAD/CARU/NARB Procedures for the Voluntary Self-Regulation of National Advertising.  Details of the initial inquiry, NAD's decision, and the advertiser's response will be included in the next NAD/CARU Case Report.