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Walmart Uses Rivals' Discounts to Fuel New Loyalty Program

Behind App to Match Competitor Ad Prices Lies Ambition for Huge Database and New Utility-Driven Rewards

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Walmart is using a new digital extension of its longstanding guarantee to match competitors' advertised prices to address a question that's dogged it for years: How can it launch a loyalty program without the promotional deals it's long shunned as part of its everyday-low-price philosophy?

The answer: Walmart is essentially using rivals' discounts to fuel its own loyalty program and get individual shopper data into its database.

Savings Catcher, which began with a seven-city test this spring and rolls out nationally this summer, automatically gives shoppers refunds for the difference between what they paid at Walmart and lower prices advertised by competitors.

To get the refund, which is, for now, limited to grocery, health and beauty items but eventually will cover produce and general merchandise, shoppers must scan receipts into their smartphones or enter a numerical code at Walmart.com (a plan is also in the works to let people enter receipts by typing their phone numbers at checkout terminals). If a third-party tracking firm finds comparable items advertised online or in print by a local rival at a lower price, shoppers get refunds automatically loaded onto electronic or physical Walmart gift cards to be used online or in stores.

One goal is to highlight the retailer's longtime ad-match guarantee. But it's also clearly about data collection just like loyalty-card programs long used successfully by supermarket chains such as Kroger.

"What's great about that is that we're unencumbered by an existing CRM system that's really a coupon distribution system with a lot of direct mail," said Walmart Chief Marketing Officer Stephen Quinn during a media presentation in Rogers, Ark., last week. Walmart's "digitally enabled" approach will ultimately capture all the data conventional loyalty programs do, he said, and get it to store and merchandising management.

"I venture to say it won't be very long before Savings Catcher is as large as anyone's loyalty program," said Cindy Davis, Wal-Mart Stores' exec VP of global customer insight.

Savings Catcher has been backed by TV, digital, social-media, in-store media and Pandora radio ads, led by Martin Agency, Richmond, Va., in its seven-city test and is likely to see a similar mix nationally. It's one of the company's best-testing concepts ever, Mr. Quinn said.

"We've seen behavior change," Mr. Quinn added, as people discover "they don't have to do all the work of going through their circulars, clipping coupons and going all over town." He declined to disclose data on the sales impact.

Since smartphones will play a key role, Gibu Thomas, senior VP of e-commerce and mobile for Walmart, sought to dispel the notion that Walmart shoppers are less likely than others to use them. He said 65% of Walmart shoppers have smartphones, including 80% of those under 35.

He also outlined a host of utilities Walmart is building into its app and website around e-receipts.

"As far as targeting customers with offers, we don't do that," Mr. Thomas said, because it's at odds with the retailer's everyday-low-price strategy. But his team at @WalmartLabs in Silicon Valley is planning to make shopper data and analytics from the program available to shoppers themselves, in a departure from most loyalty programs. Walmart is building capabilities that will let people search and sort their receipts, get pie charts breaking down how they spend their money, generate "predictive shopping lists," keep a running tab of in-store purchases to stay on budget, get notifications when there's a manufacturer coupon available for an item on their list, or get the best-priced bundle of items within a pre-set budget.

"We found the best shopping list is one you don't actually have to create," Mr. Thomas said of the predictive lists. "There's a lot of similarity to what people buy this week and next. There's a cadence and serendipitous discovery aspect of what people want to buy."

The idea is to bring e-commerce-style suggestions to the store, so "you never leave our store without something you really need," he said. His broader goal is that e-receipts become "the least interesting thing" about a program that's really a "platform that becomes indispensable tools for the customer."

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