Wal-Mart and the Vlasic Pickles

What is intriguing about this story is the way that Wal-mart, the largest company in the history of the world, according to Charles Fishman in his recent book The Wal-Mart Effect, is fundamentally changing the topology of the marketplace. The story of the gallon jar of Vlasic pickles is a case in point.

As Fishman relates the story, the Wal-mart pickle buyer wanted to make a ‘statement’ with pickles. Vlasic agreed to sell Wal-Mart a one gallon jar of pickles that they could sell at $2.97. Accustomed to buying considerably smaller jars of similarly priced specialty pickles at the supermarket, Wal-Mart shoppers began buying the gallon jars at a rate of 200,000 per week.

The effect of this pickle promotion was wide ranging. Consumers perceived a bargain and began buying the gallon jars to the exclusion of their more traditional pickle purchases. Vlasic felt obligated to continue selling this product to Wal-Mart at this price due to an implied threat that Wal-Mart might source it elsewhere if Vlasic raised prices. Ultimately there was a general devaluation of the retail pickle market that, in part, resulted in Vlasic declaring bankruptcy.

The part of this story that is relevant to the present discussion is that a $2.97 price for a gallon jar of pickles was a lie. It was fabricated by Wal-Mart for the sole purpose of making a statement and was unrelated to either consumer demand or an excessive supply of pickles. Consumers would have willingly continued with their traditional pickle purchasing practices but instead were now throwing away the moldy remains of gallon jars of pickles that they couldn’t possibly consume. Nor could they go back to their old buying practices for they now felt that the smaller jars of pickles were overpriced.

Wal-Mart, due to it’s size and influence had, not for the first, or last, time, changed the topology of the retail landscape in ways that fundamentally altered the way that manufacturers, retailers and consumers would behave.

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