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What Is Walmart’s Everyday Low Prices Business Model and How Does It Work?
Learn which major retailer uses the Everyday Low Prices (EDLP) strategy. Understand how this pricing approach differs from promotional pricing and why it became a competitive advantage.
Question
Which company uses the “Everyday Low Prices” approach?
A. Costco
B. Walmart
C. Patagonia
D. Avanti Fellows
Answer
B. Walmart
Explanation
Walmart uses the “Everyday Low Prices” (EDLP) approach as its core pricing strategy. This model has defined Walmart’s competitive positioning since Sam Walton founded the company and remains central to its brand identity.
The Everyday Low Prices Strategy
EDLP means Walmart maintains consistently low prices year-round rather than fluctuating between regular prices and promotional sales. Key elements include:
- Stable pricing that avoids frequent discounts or sales events
- Elimination of the need for customers to wait for deals
- Predictable value proposition that builds customer trust
- Simplified pricing management across thousands of locations
- Lower marketing costs compared to promotional strategies
Customers know they receive competitive prices on any shopping day without timing purchases around sales cycles.
How Walmart Achieves EDLP
Walmart sustains low prices through operational excellence:
- Massive purchasing power negotiating lowest supplier costs
- Efficient distribution systems minimizing logistics expenses
- Lean store operations reducing overhead
- Advanced inventory management preventing waste
- Technology investments streamlining processes
- High sales volume allowing thin profit margins per item
This infrastructure enables price points competitors struggle to match while maintaining profitability.
Why Other Companies Don’t Fit
Costco (Option A) uses a membership-warehouse model focused on bulk purchasing and treasure-hunt shopping experiences. While prices are low, the membership fee and limited selection differentiate it from Walmart’s EDLP approach accessible to all shoppers.
Patagonia (Option C) positions itself as a premium outdoor brand emphasizing quality, durability, and environmental responsibility. Pricing reflects higher manufacturing standards and sustainability commitments rather than everyday low prices.
Avanti Fellows (Option D) is an educational nonprofit organization providing college and career readiness programs in India. It operates outside retail entirely, making pricing strategy irrelevant to its mission.
Strategic Impact
EDLP became Walmart’s sustainable competitive advantage, differentiating it from competitors using high-low pricing (regular prices with frequent promotions). The strategy attracts price-conscious consumers seeking reliability and convenience, making Walmart the world’s largest retailer by revenue.
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