NAD Recommends Walmart Discontinue Certain Savings Claims, Following Challenge By Staples

New York, New York – Feb. 22, 2011– The National Advertising Division of the Council of Better Business Bureaus has recommended that Wal-Mart Stores, Inc., modify or discontinue certain comparative pricing claims.

NAD, the advertising industry’s self-regulatory forum, examined claims made by Walmart in television, radio and print advertising following a challenge by Staples, a competing retailer of office and school supplies.

Staples challenged a national television commercial that stated consumers would “save 30% or more versus the national office superstores,” and objected to claims made in print and radio advertisements, published in various markets around the country, that Walmart shoppers would save anywhere from 28 percent to 63 percent on school supplies in their respective markets.

(Full text of decision available to media, upon request)

In making a comparative savings claims, advertisers should take care to assure that the object of comparison is clearly defined for consumers and that the savings are carefully calculated.

The broadcast advertising was set in a busy home office where children were playing with their mother’s office supplies. The advertising claim at issue was based on 36 distinct items, which Walmart said were identified in the commercial. NAD noted in its decision, however, that even “on close examination, a consumer would find it difficult – if not impossible – to identify 36 distinct items in this fast-moving, 15-second scene. NAD therefore determined that the ‘save 30% or more’ claim, within the context of the challenged commercial, could be understood as conveying a message of broad savings, beyond the 36 items identified by Walmart.”

NAD recommended the advertiser discontinue the claim at issue.

NAD next considered the print and radio advertisements published around the country. Each print advertisement featured a two-column back-to-school shopping list that compared the prices of each item at Walmart versus Staples. The list was headlined: “We did the math for you: You’ll save when you shop with us.”

Given the prominence of the price comparison, NAD determined that consumers would understand the percentage savings claims as relating to the items on the lists, rather than all items available at Walmart and would recognize that the advertisements were tailored to “back to school” season. NAD found that the format of the challenged back-to-school advertisements did not convey a message of store-wide savings.

However, NAD was troubled by the various price inaccuracies identified by Staples and noted that Walmart’s percentage savings claims were significantly affected if the price for a given product was inaccurate. NAD recommended that the advertiser discontinue any references to inaccurate prices, as well as any percentage savings calculations that are based on these inaccuracies.

Finally, NAD was troubled by the savings claims made in Walmart’s radio advertisements. The radio commercials were similar to the print advertisements, but did not include the list of items and prices upon which the savings claims were made.

Instead, the radio advertisements directed consumers to specific editions of their local newspapers, where they could view the lists. Consumers were unable – absent a copy of the newspaper – to understand the basis for the savings claim. Further, NAD was also concerned that the savings promoted in the radio advertisements were based in part on inaccurately reported prices for Staples goods. NAD recommended that the advertiser discontinue the percentage savings claims in the context of its radio commercials.

Walmart noted it was pleased that NAD determined that Walmart’s savings claims were properly limited. Walmart disagreed with certain of NAD’s findings, but said it “appreciates the opportunity to participate in the self-regulatory program and will take NAD’s recommendations into account in future advertising.”