Given the ease these days of comparing prices online, it seems surprising that some retailers are still selling the same products at prices that vary with store location.
But that is nonetheless still the case. A recent survey by the National Consumers League found examples among drugstore chains CVS, Rite Aid and Walgreens in which they all charged different prices for the same product — sometimes in stores that were just a few miles apart.
Walgreens, the study found, was the worst offender with its stores charging up to 55 percent more for the same item among its stores in a certain region. For instance, they found that a store in midtown Manhattan was selling Claritin for $4.50 more than another store in the same general area.
So what gives?
Diana Schulz, an online pricing expert, said that pricing has historically been set by retailers, especially grocery stores, based on the peculiarities of the local market. Differences in rent, labor costs, and pressure from other local competitors are often factors that push pricing up or down.
“But now e-commerce is changing that in some cases,” said Schulz, president of e-commerce solutions for Chicago-based MarketTrack. “It’s moving a few segments more to a national pricing.”
At the same time, some retailers are also finding ways to give local pricing — instead of a fixed national price — through their online stores and smartphone applications.
For example, Schulz’s team has found instances of companies like Wal-Mart Stores and Lowe’s providing different prices for the same products on their websites or apps based on consumers’ ZIP codes.
If this all seems kind of confusing, it is. After all, retailers are still developing strategies to sync up their brick-and-mortar stores with their online operations. And it will no doubt be a bit of a rocky ride along the way.
Anyway, let’s return back to the original issue. There may be some rational reasons for regional pricing. But why would a company like Walgreens charge a different price for products in stores that are just a couple miles apart?
Sally Greenberg, executive director of the National Consumers League, said her study, which was a partnership with union-backed Change to Win Retail Initiatives, did not find much rhyme or reason to why Walgreens stores had different pricing in stores within a same market.
It didn’t, she said, seem to have much to do with whether the store was in a more affluent or poor neighborhood as one might expect.
“It seemed more haphazard,” she said.
Jim Graham, a Walgreens spokesman, gave this explanation in a statement to the company’s variable pricing:
“Our prices reflect the costs of doing business in the neighborhoods we serve as well as any nearby retail competition. Costs can vary from one location to another, even when they are a few blocks apart in dense urban areas, based on the store’s cost of real estate, its hours of operation including whether it is open 24 hours, labor costs and the number of customers it serves each day, among other factors.”
Graham added that the company strives to be competitive on pricing with nearby competition and its pricing reflects that.
Walgreens, you might recall, has been in the hot seat a lot lately. Last month, Missouri Attorney General Chris Koster sued the Illinois-based retailer, alleging that the company routinely overcharges customers on products that ring up higher at the counter than the price marked on the shelf.
In the more recent pricing study, the league compared baskets of 25 items that included over-the-counter medicines, baby products and nutritional supplements in four different regions of the country: Dallas-Fort Worth, Los Angeles, New York City and Orange County, Calif.
One added element, Greenberg said, seems to be that Walgreens charges more in its flagship stores, which are more expensive to run. (For St. Louis shoppers this is a moot point because we don’t have any flagship Walgreens stores — which are larger stores that offer various amenities such as self-serve frozen yogurt and a juice and smoothie bar — in the region.)
The bottom line, Greenberg said, is that shoppers should be aware that they might get a better price at another Walgreens store down the street.
“Don’t necessarily just grab it and buy it because you might find it for a lot less in another location,” she said.