The nation's leading drug retailer, Walgreens, is bucking a two-year-old edict by Wal-Mart Stores against using the word on packages. Package-goods suppliers bowed to pressure from Wal-Mart two years ago to stop using the word "free" on special packs with extra product at no extra cost. Since Wal-Mart accounts for 35% or more of sales in many non-food categories, most marketers ditched "free" for all retailers in the name of efficiency. Packs that were once "20% More Free!" became "20% Bonus!" or "20% More!"
That may not seem like much difference. But Walgreens, citing research that "free" carries more weight with consumers than the alternatives, late last year began pushing marketers to restore it to their vocabulary, said package-goods executives.
Having only part of mass retail become "free" once more could prove costly, because it means two sets of labels, an extra set of Universal Product Codes, separate production runs and extra inventory. Package-goods executives estimated industry-wide costs could run into millions of dollars.
Slip-ups like sending "free"-labeled product to Wal-Mart by mistake could mean getting docked $10,000 for the first infraction and 10% of the shipment invoice for the second, said one vendor representative. "It's a logistical nightmare."
Sales and marketing executives said Wal-Mart made the change because it felt the word "free" is misleading after receiving consumer complaints that product marked "free" really should be free of charge, not just a bigger size at the same price. The policy applies to increasingly common shrink-wrapped two-for-the-price-of one packs, too.
Displaying its differing preference forcefully last week, Walgreens' circular featured a store-wide "Buy One, Get One Free" sale, using the word "free" 64 times. In Walgreens stores, such marketers as Unilever, Procter & Gamble Co., Johnson & Johnson and Colgate-Palmolive Co. already have switched to prominently featuring "free" on several special packs.
A spokesman for Walgreens said the company was not aware of Wal-Mart having taken a stand against the word "free" or that manufacturers had a problem about having to accommodate two sets of preferences. "We do use the word `free' in our promotions because consumers like it," he said. "It's a time-tested idea that's worked well for us, and we don't have any plans to change that." Wal-Mart had no comment.
Since America is a free country, "no retailer mandates what manufacturers will do with regard to packaging," said Ken Harris, a managing director of WPP Group's Cannondale Associates, Evanston, Ill. "But retailers can kindly suggest."
Rejecting those suggestions, however, could mean losing out on bonus-pack displays that have become increasingly important promotional tools. "Free is a very powerful word," he said, "but I don't think Wal-Mart will change their mind."
Wal-Mart represents 3.5 to four times the sales Walgreens does for his company, said one package-goods executive, but he sees little choice but to cater to wishes of both. He primarily blames Wal-Mart.
"They're supposed to be about driving costs out of the system," he said. "Everyone else prefers `free,' though Walgreens is the only one that's been so adamant about it. ... Somewhere the consumer value is being lost. There's no way it can do anything but add costs."