Why does Walgreens, who claims to have discount prices, in reality charge more than Target or Walmart?

Question

Where I live, all of them have signs that say "open 24 hrs" and then close at 10pm every night.

Answer 1

Because they can... they accept most insurance plans, their stores usually have a drive through to make it easier on customers, and they pay top dollar for real estate to be on the most popular corner of most towns.

To make up for all these features they charge more money for most products even if they claim to have 'Everyday Discounts'.

When you go to Walgreen's you don't have fight the crowds at Target or Walmart who are there to buy all the other products those stores sell.

Answer 2

The price that any store charges is going to be based on several sets of criteria, each of which can have varying degrees of impact on each item in the store. But it all comes down to the marginal cost for the item. In other words, what is the lowest price the store can charge and still maintain a reasonable profit margin, which is considered around 5%?

WalMart and Target also purchase items in "super bulk". Because of this, it reduces shipping costs per item along with getting volume or bulk discounts, reducing the overall cost per item, allowing them to charge a lower price and still maintain the same profit margin.

Here's a quick (but not complete) way to determine who's able to charge less:

1. What is the total cost of all inventory for sale? This will include shipping and handling, purchase, taxes, and the like just to get it to the store.
2. What is the total cost of the personnel in the store? This will be wages, salaries, benefits, and such.
3. What is the total cost of running the store? Utilities, internal-use items, and the like.

These three criteria alone make up a vast majority of the company's expenses, I'd estimate greater than 90% probably approaching 95%. Take this total and divide it by the total inventory in number of items. This will give you the average price per item in the store, which you can then proportion out based on item cost, and that will give you the average price for a single item in the store.

Typically, the smaller the store, the larger the price per item because of varying things. Shipping in larger quantities has a lower cost per item than shipping in smaller quantities because you are getting more to you for not much more on top. Plus wholesalers are willing to knock down prices for shipping in bulk because it gets it out of their warehouses quicker, reducing the chance of waste.

There's a lot that goes into it. Find an introductory book on economics at your local library or favorite bookstore, or search around online for information.

Answer 3

The term "discount prices" is really subjective to the retailer and what he considers to be a discount. Technically anything that is sold cheaper than the manufacturer's suggested price can be considered a discount.

Answer 4

Well, they are pretty good with medicine prices. WIth drinks and other stuff like that, you gotta catch that on sale or get coupon. When you catch a sale there though, you usually get whatever you're looking for pretty cheap.

Answer 5

yeah, what's that about? at least they're open 24 hours.