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How Dollar General’s Diaper Deal Wreaked Havoc on its Price Matching Competitors

When Dollar General Corp. offered packages of Pampers Swaddlers diapers at a discounted price of $9.50 for “all counts and sizes” last week, little did they know that Walmart and Target would reap the benefits of its sales promotion–or did they? Value-seeking shoppers flocked with Dollar General circulars in hand to Walmart, Target and other retailers, hoping to avail themselves of retailers’ promise to match the prices of their competitors.

However, not all packages of diapers are equal, which Dollar General’s competitors soon discovered. The packs Dollar General offered skewed small with a discount calculated at 50 cents, while Target and Walmart, among others, offered larger diaper packs with higher counts. Of course, those were the products customers demanded at the same Dollar General discounted price for “all counts and sizes.”

True to the law of unintended consequences, the big-box discounters fell victim to their own aggressive price matching programs, and two days after consumers bought diapers in wholesale lots, Walmart and Target stopped honoring the discount.

The Wall Street Journal aptly called it “diaper arbitrage,” as the number of shoppers profited on the price grew. Some customers nailed discounts of as much as 75 percent and were quick to trumpet their bargains on social media, thereby spreading the word far and wide and causing an even a bigger run on diapers.

Retailers are wising up to the stealth tactics coupon-using shoppers are taking to spy any price discrepancy or consumer advantage in advertising, promotions and coupons. For example, Walmart has begun a new training program for its cashiers at 4,200 of its U.S. stores to watch for abuse of their price matching, “two-for-one” and “Buy One, Get One Free” promotions. Additionally, only products that are identical to the ones that Walmart carries are eligible for price-matching deals.

Aggressive price matching programs are offered by many big retailers in the ongoing fight for sales in this enormous sector, and it will most likely continue in one form or another, however, there may be more small print in future to protect against another diaper fiasco.