Best Buy, Toys “R” Us, and others have complained to attorneys general in more than half a dozen states about an aggressive Walmart advertising campaign for the iPhone 5 and other electronics. The adverts promised better prices than those offered by competitors, with several retailers, including Best Buy and Toys “R” Us, specifically named. However, those retailers argue that Walmart’s information was incorrect.
Walmart has defending the ads, which began running in 31 U.S. cities last year on radio and television, and insists its information has always been correct.
“We know competitors don’t like it when we tell customers to compare prices and see for themselves,” Walmart spokesman Steven Restivo told The Wall Street Journal. “We are confident on the legal, ethical and methodological standards associated with our price comparison ads.”
Walmart’s ad campaign followed a two-year sales slump in the U.S., and attempted to regain the retailer’s reputation for rock-bottom prices. It specifically targeted a number of rivals, who were clearly named in the adverts, and compared prices. And it was successful. It initially led to a 1.2% boost in sales at stores open at least a year, and a 1.1% boost in stores located in areas where the ads aired.
Rivals claim, however, that the ads are misleading, and that they promote products the retailer doesn’t have in ample supply. Best Buy noted an ad Walmart aired over the holidays, which claimed a Dell laptop it was selling was $251 more expensive at Best Buy. But Best Buy insists that the two laptops in the comparison were different models, and that the one it was selling offered longer battery life.
“That would be like comparing a Toyota to a Lexus,” Keith Nelsen, Best Buy’s general counsel, wrote in a Dec. 20 letter to the Florida attorney general’s office.
Another ad that included the iPhone 5 had a “measurable” affect on Best Buy sales, The Journal reports. The company lost $65,000 in profit the day the ad was first announced on Facebook, because it was compelled to match Walmart’s price — even though it concluded that Walmart didn’t actually have a sufficient number of iPhones available.
Wal-Mart said its ads didn’t claim to compare identical laptops. It also said it shipped double the amount of iPhones during the promotion and that it was 98% in stock at stores that carried the devices. Wal-Mart declined to say how many iPhone 5s its stores carried during the promotion.
Walmart says it has responded to attorneys general in Michigan, Illinois, Pennsylvania, and Missouri over the complaints form regional supermarkets, and those from Toys “R” Us. Offices in Florida, New Jersey, and California have also received complaints.
Source: The Wall Street Journal