Industrial Espionage Keeps Walmart's Prices Low

Walmart’s everyday low low prices are thanks to department managers sneaking into local competing Kmarts with price guns, scanning everything, and then setting all of their prices 10 cents lower, according to a former employee and current Consumerist reader Altered Beast…

Wal-Mart had (has?) these small black electronic devices [Texlons], with a scanner and a keypad. As a group (3 or so of us, all department managers) we would head over to our local K-Mart. There, we would sneak around as a group in the equivalent of each department we managed. There we would scan the upc of various items we also carried, then punch in the price it was selling for. We were told that if we were caught, to just bolt out of there, and to NOT let anyone get a hold of this equipment! This was emphasized many times.

When we returned to Wal-Mart, we’d hand in our little machines, and a supervisor would set it in a docking station. The computer would then automatically generate new tags for our items at prices lower than K-Mart (usually around 10 cents lower). It didn’t seem to matter how much the product actually cost us, just as long as all our prices are lower than K-Marts.

Guess if you’re ever undecided about whether to buy a gallon of pickles from Walmart or Kmart, choose Walmart and save 10 cents/bushel and help feed America’s greatest oligopoly.

RELATED: Breaking the chain: The antitrust case against Wal-Mart [Harper's]

(Photo: Maulleigh)

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  1. ohayorisa says:

    I believe Walmart does this at Target also…I remember my boss chasing Walmart employees out of store once for copying price information. At the time I was under the impression they were logging the prices for specific items manually on a checklist they had brought, so maybe the scaanners are a new thing?

  2. buredemon says:

    For what its worth, when I worked at K-Mart (oh so many years ago pre-bankruptcy) our department managers did the exact same thing at the local Walmart. Except 1) they used mere pencils and paper and 2) they only checked prices on a handful of items and would then put them at the front of the store in a special “SEE OUR PRICES ARE LOWER THAN WALMART” section.

  3. Leiterfluid says:

    I suppose to only thing newsworthy about this is how automated the process is. When I worked for Best Buy in 1994, we would often go to competitors to see what their prices were, and sometimes take pictures of the displays.

    Sure it sounds shady, but that’s how the free marketplace works.

  4. enm4r says:

    I have never worked retail, nor would I desire to, but I pretty much expected this to be the case. And honestly, I don’t really find it unethical. The fact that it’s so automated might make this newsworthy because it seems excessive, but I don’t see fundamentally what the problem is here.

  5. dvddesign says:

    This is pretty common. I worked at Wal-Mart for 7 years and our managers would give us promotional stuff, giveaways, etc for reporting prices within our departments. All it does is encourage competition on a store level to provide competitive prices. Not to excuse Wal-Mart from anything else they did, but I never saw the harm in it. I caught managers from our local K-Mart and Targets crawling our store all the time for prices.

  6. Buran says:

    This isn’t illegal, though, as you can’t copyright a fact — much to the chagrin of MLB, which tried to sue stats compilation services once.

  7. freshyill says:

    Actually, the devices are called Telxon (pronounced “telzon”). They’re pretty common in just about every major retail store. I don’t think we ever had a competitor bring one into the store while I worked at Best Buy, but I do remember people coming in to get price lists. I imagine our management would have escorted them out if they did. You can’t copyright a fact, but you sure as hell can kick anybody out of your store for just about any reason you want. It is private property, after all.

    Here’s some Telxon pictures: [images.google.com]

  8. Keegan99 says:

    Espionage? It’s not like they’re dumpster diving or piecing together shredded documents. It’s publicly available information!

    Or is it only nefarious “espionage” because the evil horned beast known as Wal-Mart is doing it? (setting aside the fact that it results in lower prices for consumers, mind you)

    If mom and pop store A sends a clerk over to mom and pop store B to find out what B’s price is on an item, is that “espionage”?

  9. bedofnails says:

    What, 6 comments in and no “Walmart is the Antichrist”, or “this is what Walmart does when they’re not killing babies or starving childern” comments.

    Where am I?

  10. Keegan99 says:

    Oh… and I guess looking at the story below, NetFlix is guilty of “Industrial Espionage” as well. Those bastards!

  11. ThomFabian says:

    If this is “Espionage” then AlteredBeast is guilty of giving away classified trade secrets.

  12. TimSPC says:

    @buredemon: So, in theory, the two stores could keep going back and forth cutting prices until they were free?

  13. exlawyer says:

    This is espionage? Give me a break. It’s good business and it keeps pressure on both stores to keep prices low. I am all for it.

  14. Kwummy says:

    Whatever takes the focus off your face.

  15. number six says:

    They’re Telxons, not Taxlons, and my Wal-Mart did it as well, but not just KMart, but Kroger, Save-A-Lot, et cetera. That was pretty rampant, actually. Part of the reason I left management was because they hired someone whose sole purpose was to “comparison shop”.

  16. TimSPC says:

    How much do these “comparison shoppers” get paid? It sounds like a lot of fun, actually. I’d enjoy doing that.

  17. FishingCrue says:

    You left because they were lowering prices? I could understand if they were doing this at a local mom and pop store but when big companies compete we all win (as long as they don’t drive each other out of business). I don’t understand why this is bad? It is nothing more than the free market working efficiently.

  18. Maulleigh says:

    Well, people spend a buttload on impulse buys. So they’re making way more than ten cents back.

    I’m in the wrong business.

  19. Applekid ┬──┬ ノ( ゜-゜ノ) says:

    “Do you expect me to talk?”
    “No, Mr. Price Scanner, I expect you to DIE!”

  20. Jesus On A Pogo Stick says:

    When I worked at Best Buy we would have this one Circuit City manager come in every weekend and check out our prices. We knew who he was and what he was doing; no one cared. We were even told to be nice to him. But I believe no one cared because one of the managers would go over to Circuit City and check out their prices. Everyone was cool with it. Also, neither managers would use the Taxlons. They would just use paper and pencil/pen.

    I guess I just don’t see the problem.

  21. jaredgood1 says:

    Meh. Where I went to college, there was a small gas station right across from a Coastal that set their price always 3 cents cheaper than the Coastal. I’m totally fine with this kind of behavior. Besides, it’s not the policies that keeps me out of Wal-Mart, it’s the other shoppers.

  22. balthisar says:

    Gosh, I remember back in — what, 1984 — the new IGA opened close to my trailer park, which was nice in that we didn’t have to go all the way to Kroger. But I knew the Kroger manager on sight, having always gone there with my mum to shop. On our first trip to the IGA, who’s in aisles writing down the prices? The Kroger manager.

  23. nctrnlboy says:

    WOW!!! A WHOPPING 10 cents! All THAT…for 10 cents? wtf?

  24. buredemon says:

    I can’t find any follow up, but I was interested to see that a Tulsa grocery store sued Walmart over the practice alleging trespass (after the district attorney declined criminal trespassing charges). Given that the practice continues unabated, I assume they lost [or settled for virtually nothing]. See: [www.allbusiness.com]

  25. Trackback says:

    Local · Chef Seamus Mullen’s favorite kitchen supply shops [TONY] · Boerum Hill stores to be linked by backyard garden [Brownstoner] · The Barneys Warehouse Sale: full of “non-industry women freaking out over any and every discount” [Almost Girl] National · LED watches defeat…

  26. nctrnlboy says:

    @buredemon:

    I would think you could only charge tresspassing IF the walmart spy was caught once before & told never to come back again.

  27. Televiper says:

    The consumerist should at least put the “industrial espionage” in quotes. Wal*Mart employees are simply collecting public information. In fact I’m suprised Wal*Mart doesn’t advertise this. The only real complaint is that it may disruptive to people actually shopping there.

  28. Steel_Pelican says:

    Hmmm… On the small scale, I can see this being negligible- if it’s just a few guys with pen and paper, the amount of information you could get away with would be pretty small- good for setting up displays and sales, but you couldn’t price your entire inventory that way. And the amount of time it takes your “spies” to collect the info probably costs the company more than you make on the sale- but creating the perception of lower price pays off in the long run.

    But when you start to involve price scanners, things could conceivably change. The right technology (scanners aren’t there yet) could allow you to undercut a competitor’s entire inventory, which is a lot different than undercutting them on select Glade Plug-Ins.

    On the small scale, I would call it competition. On a bigger scale, I would definitely think it qualifies as unfair business practices, or even espionage.

  29. joebloe says:

    Why is this news and why should anyone be surprised by this? Many companies in all in all industries and in all countries are involved in this practice. On similar note, every company has a secret facility where they bring in competitors’s products for disamsembly, analysis, and copying. This is all good for us consumer…better products and better prices.

  30. Aladdyn says:

    It does not fit the definition of espionage.

    ——————————————-
    es·pi·o·nage (Ä›s’pÄ“-É™-näzh’, -nÄ­j)
    n. The act or practice of spying or of using spies to obtain SECRET information, as about another government or a business competitor.

    espionage. (n.d.). The American Heritage® Dictionary of the English Language, Fourth Edition. Retrieved August 16, 2007, from Dictionary.com website: [dictionary.reference.com]

  31. Wubbytoes says:

    I remember WM doing this at local grocery stores when a new supercenter opened here.

  32. nctrnlboy says:

    I am suprised they dont have scanners made into an undershirt harness with the scanning head attached to the wrist so that it could be completely hidden under a long-sleeve shirt. All wal-mart spies would have to do was to pick up a product & scan the upc code at the same time (or scan the sticker on the shelf while reaching for the product).
    I find the “just bolt out of the store if you get caught” practice funny.

  33. temna says:

    I worked for the local Sams Club. Price matching to the local Costco and other local stores was my fulltime job. This report does little to surprise me. I remember when I left Sams they were talking about bringing in a small PDA-esque Telxon for price shopping at Costco. Sams was so cheap they made me pay for my Costco membership and the PDA I used to price match.

  34. Major-General says:

    Okay, I’ve heard this a couple of times, so here are some questions: since the telxon is basically a dumb (though wireless) Unix client (System 4.51 last I knew) is it interacting with the other store’s system, or rather is it just being set to scan a barcode.

    If it is interacting with the other store’s system, then the use of one is a massive security error.

    If more likely it is scanning the barcode and the price is being entered separately, then what’s the point, as it will only be marginally faster than by hand with a higher risk of getting caught. Plus the risk of damaging or loosing a telxon. (They’re only like a grand each.)

    So, can someone who has done this actually explain the method, because the last time I heard about it supposedly they were also getting the rival stores markup.

  35. notallcompaniesarebad says:

    @Major-General: “If more likely it is scanning the barcode and the price is being entered separately, then what’s the point, as it will only be marginally faster than by hand with a higher risk of getting caught.”
    The post states that they have to key in the prices and therefore it is not interfacing with KMart’s system.

  36. bedofnails says:

    So are Kmarts Nazi tees 10 cents more?

  37. EvilSquirrel says:

    No matter what business you are in, it is just smart to know what the competition is selling products for. They could probably save themselves some time and pick up the sales circular from the Sunday newspaper.

    Unfortunately this is not really espionage. I think you have to do something like hack their computers and steal next week’s pricing data to qualify as espionage.

  38. disavow says:

    Walmart does this at the Target where I used to work. And Target returns the favor.

  39. mikecolione says:

    I used to work as an assistant manager for walmart and we did it at all local competitors. Kmart, Target, Kohls, Best Buy, etc.

    Most of the time we were able to just scan the barcodes without having to enter the pricing information as the barcodes were generally the same. Once in a while if prompted we would enter the price, but it was rare.

    Sometimes when they were signifigantly lower in price than we were we would head over and buy the item in bulk until they were out of stock, we then sold it in our store for the higher price.

    Talk about monopoly…

  40. Hexum2600 says:

    The new Telxons the Best Buy I just quit had gotten in ran a version of Windows Mobile… it could still run the terminal based programs off of the store’s server, but theres nothing to say that a program couldn’t be written to run on windows mobile that could read the barcode off the signs… Best Buy signs have a barcode on them that includes the UPC, Price, and sign type. It actually reads xxxxUPCxxx – sign type – price

    So assuming that the program knew how to read kmart barcodes ( a simple simple task) and had some kind of storage (and i do not know how much storage a telxon has) it could be setup to read it all… i kmart or target had barcodes on their stickers which incorporated all of that information.

  41. j-o-h-n says:

    Seems to me that a Kmart could have some real fun at walmart’s expense by putting monstrously low prices on something they have almost none of and that the local walmart has lots of.

  42. Bluebell says:

    I worked at a Wal-Mart briefly when I was 17 and they encouraged all employees to go “comp shopping,” but the almighty Telxons never left the store. They had a list in the back of specific products that they wanted to be lower than the competitors on. I guess they have some kind of formula for types of items to price low that will bring people into the store so that they can keep prices higher on what they think people will buy regardless once they’re in. I’m not sure exactly, it’s been awhile.

    I always found it more repulsive that the managers got a bonus for keeping payroll low (i.e. short-staffing the place) and therefore working their fewer employees just that much harder. Or their idea of promoting kids to management positions right before or shortly after they graduated high school in hopes of gaining an employee for life that they could mold. Or how instead of telling people they were laid off, they’d just remove them from the schedule. It’s such a classy joint I really can’t pick a favorite.

  43. TheNinja256 says:

    I work at a Sam’s Club and I know for a fact they do this. It’s not really a big deal. What’s news worthy about this?

  44. stopNgoBeau says:

    Sam Walton began doing this when he opened his very first store, prior to Wal-Mart. I remember watching a History Channel story about it. He would put on a cap and some sunglasses, go over to the Wolworths, or whatever it was called, and make sure his prices were a nickle or dime cheaper. Nothing new here.

  45. Bourque77 says:

    @ALADDYN: Thats whats going on in formula 1 between mclaren and ferrari. This is nothing unusual going on.

  46. Snarkysnake says:

    Heres an idea : Take those “price checkers” and the battalions of “managers”,”assistant managers” and corporate assclowns that wander around my WalMart and
    PUT THEM AT THE DAMN REGISTER TO CHECK ME OUT SO I CAN GO HOME.That would do more to make me a loyal shopper than all of the 10 cent discounts in the world.Who cares whet KMART is doing,really? They haven’t been relevant for years. Target (at least the one in my city) always has enough cashiers,and get this, they are under 70 years old !

  47. pontyack says:

    I think it is funny that Wal-Mart is always the evil one. I worked at Target when I was in college as one of the cashier team leads. One of my duties was to organize my team to hit various stores to gather pricing information. We didn’t use scanners; we just photocopied the list of items down to a very small size and then inserted it into an old checkbook. The team would then look for the item, write the price down and then head back to our store.

  48. Consumer-X says:

    Wal-mart takes steps to ensure they are selling goods cheaper than the competition and you call that industrial espionage? Are you serious? I believe the correct name for that practice is called Capitalism. There is nothing wrong with what Wal-mart is doing. The anti Wal-mart faction in this country is based on pro union groups who are angry that Wal-mart is non union nothing more. It is time we all stop carrying the water for that special interest group.

  49. markwm says:

    Yeah, and when I worked in the mom and pop grocery store, and the local chain store, and even a regional grocery, they did the same thing. Almost all stores do this to some degree.
    Dad likes to tell the story of the two gas stations in his home town who would compete over having the lowest gas prices back in the ’50′s. Every night, one would lower the price on his sign to a penny or something, so the other guy couldn’t see his price on his way home. One morning he got to the store late and didn’t get it changed before customers showed up, so he had to sell it for the penny. Same concept, even back then.

  50. taylorich says:

    I would have thought the folks at consumerist were more savvy than this. It’s been happening for years and years and is standard practice in retail. We did it at Best Buy in 1994…we used a voice recorder so we couuld just say the model number and the price into it. It was part of our job as a department supervisor.

  51. j-o-h-n says:

    @Consumer-X: Hogswallop. I could care less that walmart is non-union. I don’t like it because shopping there is an unpleasant experience. It’s dark, dingy and dirty. The aisles are blocked with piles of crap I’d never want to buy. They’ve got twenty checkouts but never more than two are staffed. The employees look like the kind of beaten down women who won’t leave their abusive boyfriends either. And I know that my tax dollars are going to subsidize their food, housing, and medical because they haven’t got it in them to get up and leave and get a better job.

    On the rare occasions that my wife drags me there for whatever damn thing she couldn’t find at Target that time, I’d GLADLY pay $0.10 for every item in the cart to be whisked away back to Target. Ugh.

  52. gc3160thtuk says you got your humor in my sarcasm and you say you got your sarcasm in my humor says:

    I’m glad pretty much everyone here realizes this is a common practice with all companies and not just Walmart. I can remember when my mom worked at a supermarket in RI, a regional chain named Shaws, and also when she worked for Kmart they did the same thing. As for them using the telxons, I call bullshit on that. Since the units are on Walmart’s wireless network they won’t work if you leave the store. In fact if an employee is signed into one and then clocks out for lunch the telxon signs them out of it immediately so tell me how they could use it outside of the store then. Not possible.

  53. cruzer55 says:

    Nowadays there are a couple of options available to wal-mart associates when price shopping. The latest and greatest method involves a pda which scans the barcode on the item, then the associate enters the price, and the location of the item. All this data gets logged in the pda’s memory until they return to the store, at which point it wirelessly syncs. The other, older fashioned choice is to print a report from wal-mart’s computers with all the items and blanks for prices from competitors. (I believe the two pda’s are made by symbol, and their model numbers are 8846 and mc50)
    Either way, this is just old-fashioned capitalism, and an easy way for wal-mart to keep its low prices. Even though wal-mart specifically prohibits other stores from doing the same thing in its stores (it’s posted by pretty much every service desk in the country).

  54. bedofnails says:

    @j-o-h-n:

    Here here, forget those ugly hags at Walmart, I only buy my Chineese made goods from beautiful people at Target.

  55. ribex says:

    Telxon=Tells On…=Tattletale? :)

    Ya, this story is no surprise, and will eventually be obsolete when (and I’m assuming when, not if) all in-store pricing information is available online.

  56. superbmtsub says:

    Managers sneaking around? I bet they feel mighty proud of their accomplishments.

    “2 candies for you today. 3 tomorrow if you bring in more!”

  57. s35flyer says:

    So what? This has been going on since the start of competition and everybody does it. Does anybody not think that?

  58. Raziya says:

    I think a lot of stores do this…I work at Shaw’s (a grocery store), and every week someone from our store will go to our competitor in town and check their prices to make sure we are in line with them. However! Taking a Telxon in and scanning everything you can before you get caught? A little over the top, IMO.

  59. emjsea says:

    “So what?,” indeed. Although it makes a fantastic hysterical headline, it’s hardly industrial espionage. Prices in a public store aren’t a “secret.” And good for them for having the lower price.

    Ben gets more and more gaytarded all the time.

  60. Kat says:

    FWIW, they are Telxons (not Texlons) and it’s pronounced tel-zon. I’m sure there’s more than one model, but the ones I’ve seen are not small and easily-concealable… they are larger than a PDA with a big trigger-like handle on the bottom. (This Google Image search shows several models, indeed some without handles, but still they all look larger than a graphing calculator.)

  61. Kat says:

    Whoops… what Freshyill said.

  62. revmatty says:

    The funny thing about this is I remember a big hubbub in the late 90′s about this practice of price shopping, but it was Wal-Mart threatening to prosecute anyone they caught in their stores writing down price information (even if you were just doing your own personal price comparisons to decide where to buy something).

  63. dragon:ONE says:

    Symbol/Telxon makes finger scanners… they go on, say, your ring finger, and it is hooked up to the PDA (They make a wearable PDA). It would make for a really covert scanning operation.

    [www.symbol.com] <– the ring scanner

    [www.symbol.com] <– the WT4000 Series Wearable Terminal

  64. bbbici says:

    if you own a store and you don’t regularly check competitor prices, then you are a pretty bad businessperson.

    good for you, Walmart.

  65. HaxRomana says:

    I remember being asked to do this by my district manager at the video store. He made me call around to all the competing video stores and ask them intricate questions about their pricing schedule for individual rentals and subscriptions. Unfortunately for my career in espionage, I called all of those stores at least three times a week to arrange trades when customers mistakenly returned their videos to us (or vice versa), and they all definitely knew it was me. Oops.

  66. DeanVenture says:

    I worked at Wal-Mart for about 4 years and “comp shopping” was a weekly thing all department managers did. My manager was a fairly attractive little lady that was easily recognized and, because of that, she wasn’t allowed to go in to a lot of stores if someone recognized her. Also, they don’t take a Telxon with them, it’s a scanner that works on the same platform but is about the size of an old Nokia cell phone. They get all the info they scanned once they return to the store and upload it.

  67. Blueskylaw says:

    Admire or revile? Seems to be a question for the ages.

  68. Soldier_CLE says that Hideo Kojima has to make MGS till the day he dies! says:

    you know, even with some of the newer stores that Wal Mart have been building in my area (Greater Cleveland) and their shoddy attempts to emulate Target’s fonts and designs in certain things, like marquees, I still am not quite sold on shopping in a Wal Mart for alot of things and/or reasons.

    Around my area, there’s still only one or two cashiers (like our two Super Ks), lack of any customer service, and their auto department even didn’t replace the oil in an oil change that I purchased from them! (It took them 2 1/2 hours to drain my oil and not put anything in there to replace it!)

    So, yeah… dirty stores, shoddy service and a bad oil change that resulted in heavy repair costs have me preferring the more trendy and (for me) more reliable Target stores.

  69. kelbear says:

    I’m not seeing the big tragedy. These prices aren’t an industry secret. It’s like espionage on a bus stop. They chose to lower their price in response to competition. Even consumers do the same on Ebay. There’s nothing illegal or immoral in this specific practice. I’m sure these companies have plenty of other problems that are more deserving of attention than this.

  70. mac-phisto says:

    i’m confused. typically a bar code on a shelf tag would only contain the product sku – not any pricing information. that information is usually contained within the store’s (or company’s) database. the bar code only identifies the item.

    soooooo…i would assume that the telxon scanners would only identify an item – the person using them would still have to manually enter the price of the item after (or before) scanning the bar code.

    if the price of the item is included in the shelf tag bar code & i were the manager of a store that was regularly price checked by other store personnel, i think i would find a way to manipulate the price in the code just to screw up their little game. imagine manipulating the codes so they read $0.01 for EVERY item. does that mean walmart’s infallible system would be printing tags for $0.00 or even -$0.09? sweet!

  71. wwwhitney says:

    Amusing anecdote:

    I work for a consumer electronics company and I was doing a little bit of research on how are products were being placed compared to our competitors at different stores. I was occasionally approached at stores by a manager because I was photographing and writing things down on a clipboard. If bothered, I would just give them a business card and never had any problems.

    One time I was doing this at Walmart and an employee came up and asked what I was doing. After I told him who I worked for, he told me that he assumed I was from the Best Buy up the street because apparently they were always in there scouting out Walmart’s pricing.

    My point: every major retailer does this and why wouldn’t they?

  72. dustyd_64 says:

    I was one of the first employees at a Sears pilot store in West Jordan, Utah called “Sears Grand”.

    Now, as confident as Wal-Mart seems, I’ll be damned if they didn’t try to sneak a peek at our building every five minutes….even before construction was complete! In fact, our security was so tight that when they did manage to get in, they ended up leaving in a police car minus several very expensive digital cameras.

    Going on, after we had our grand opening, slowly but surely the Wal-Mart down the street started doing their displays a little different from other wal-marts, and lo-and-behold, they now had a full service tool department, they even had table saws!

    Does anyone remember the electronics department remodel done in all Wal-Marts nationwide??? Yeah, that remodel is pretty much a poor man’s version of our electronics department in the pilot Sears Grand.

    Nowadays the Wal-Marts are being remodeled to look like a bastard child of Sears Grand and IKEA. But don’t worry, you won’t be seeing any quality products or european modernism at Wal-Mart anytime soon!

    By the way, we thoroughly enjoyed price-warring with Wal-Mart, even with the approval from corporate to do some serious damage.

    (P.S., if you’re dumb enough to be sucked into buying something from Wal-Mart because the least expensive one beats all the other local stores, do yourself a favor and read up on the “Wal-Mart low price point strategy”.

  73. Jasoco says:

    I work at K-Mart but I’ve never seen this. Though our closest Wal-Mart is like 15 miles away. The Target is closer to them. Actually, we’re lucky to not have a Wal-Mart close to us being the highest successful K-mart in the company. I would love to tackle one of these Wal-Mart people. God would I love to do that. Get my hands on one of those devices and I’d be a king. A king I tells ya!

    Seriously though, I would risk my job to get my hands on one of those computers. So you better stay out of our Doylestown, PA store.

  74. CoffeeAddict says:

    Although it seems a little under handed it’s very fair to check out your competition and if you can beat them great. Almost every other store does the same weather it’s Wal-Mart or Goodyear they all check out the other guy so they can beat them. That is how out economy works so get used to it.