Sorry, National Consumers League: Walgreens’ Inconsistent Pricing Isn’t a Big Deal
The National Consumers League recently released a new report showing that prices can differ substantially among different stores of the same drugstore chain, with Walgreens being the biggest offender. Researchers went to 485 Walgreens, CVS, and Rite Aid locations in four major cities in the U.S. and bought a basket of 25 “typical” products, which included orange juice, coffee, soap, deodorant, diapers, and toothpaste. In terms of public opinion, it probably doesn’t help that this study comes at a time when Walgreens is being sued for false advertising and charging customers more than what’s stated on display tags. That’s shady, but what the NCL found is not so bad.
Let’s take a look. According to the study results, a Walgreens customer could pay up to 55% more for an item. In some cases, the price difference for a particular product can be significant. In Manhattan, for example, “consumers could pay $4.50 more for a package of Claritin—a nearly 40 percent difference—if they picked the wrong midtown location.” However, this figure from NCL’s New York-specific report doesn’t tell what the average price of Claritin is in Manhattan, or whether consumers are really paying $4.50 more at one Walgreens or $4.50 less at the other.
According to the general report, Walgreens is five times more likely than a competitor to charge different prices for the same item in a single market. It had “more than eight times the number of products with a 20 percent or greater price range than CVS. Rite Aid had no products with that big of a gap. Walgreens also had more than twice the number of products with a price range over $1 than both competitors.”
In a Chicago Tribune article on this report, a Walgreens representative is quoted as saying that costs vary from location to location in urban areas depending on a multitude of factors, including hours of operation, how many customers served, nearby retail competition, and rent. That last factor alone seems to me like a believable explanation for how Walgreens prices can differ so much in the same Manhattan neighborhood. Ultimately, it’s not so terrible. So New Yorkers could pay $56.30 more if they bought those 25 items used in NCL’s survey in the more expensive Walgreens locations, but what New Yorker buys orange juice from a Walgreens?
Further down in the report is the opinion that “shoppers often decide on drugstore locations based on convenience, and there is an expectation that pricing across a chain for the same item in the same market is consistent and transparent.” Well, there’s the problem. One should never just assume consistency and transparency.
Last New Year’s Eve I watched the ball drop at a Pizza Hut in Penn Station. Ten blocks away, Psy was performing in the closed-off Times Square, as crowds of people who flew from all over the world to spend New Year’s in New York danced along all rosy-cheeked. They probably wouldn’t care if you told them about Walgreens’ Claritin pricing. Back in warm and greasy Pizza Hut, a woman was ranting: “… I was born and raised in New York, and I should be able to bounce that ball up and down if I want to.” It’s funny that the NCL picked midtown Manhattan to display the worst of Walgreens’ price discrepancies, because midtown Manhattan’s not midtown Manhattan if prices aren’t arbitrarily expensive.
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