I wrote about this subject a long, long time ago. Nevertheless, I rarely see this little-recognized truth put so plainly as I did in today's NYT review of Ellen Ruppel Shell's Cheap: The High Cost of Discount Culture:
"Wal-Mart actually has higher than average prices on about one-third of the stock it carries," Ruppel Shell writes. "On those items for which prices are lower, the average savings is 37 cents, with about one-third of items carrying a savings of no more than 2 cents."
Ruppel Shell (as summarized in the review) actually goes on to make a more obvious point that I never see anywhere (perhaps because people are afraid they'll be attacked for elitism if they make it):
"Even if you never shop at Wal-Mart, you are still better off with Wal-Mart nearby," the M.I.T. economist Jerry Hausman told Ruppel Shell, and he judged that effect to be "the equivalent of 25 percent of food spending." Yet his study compared only the cost — not the quality — of largely generic items. "How are consumers to know whether the lower price of chicken breasts at Wal-Mart" signifies "a good deal on a superior product or a bad deal on an inferior product?" Ruppel Shell wonders.
All food is not the same. Indeed, as I've explained often in the past, Walmart injects its chicken with salt-water and keeps beef fresh under plastic in a carbon monoxide bubble (two name two examples of things you should worry about). Therefore, comparing the meat at Walmart to anything from a butcher (assuming you can find one) is like comparing oranges and lemons (with Walmart, of course, selling the lemons). Save pennies. Eat worse.
Ruppel Shell's book appears to cover many other salient points relating to the real cost of low prices – externalities, as the economists call it, like environmental damage that don't show up in the price you pay at the cash register. However, if Walmart's prices aren't that low, why on Earth would you ever shop there in the first place?*
JR* OK, I'll give you a pass if you live in an isolated small town where Walmart put all the competition out of business ten years ago, but nobody else!