News 4 Investigates: The Color of Money - KMOV.com

News 4 Investigates: The Color of Money

"The color of money" is a phrase often used by University of Texas professor Jerome Williams to describe the way retail pricing and marketing policies impact minorities. Dr. Williams is a nationally recognized expert in marketing practices and has testified as an expert witness in hundreds of court cases.

He says the practice of a retailer charging different prices for the same product at different outlets in the same market area -- known as store-level pricing, micro-marketing, or zoned-pricing -- is not unusual. But he was fascinated by what we found in our survey of prices at area Walgreens stores... fascinated because he says this is the first time he has heard of such a three-tiered level of pricing.

Other Stores

We conducted an on-site survey of only Walgreens stores, but we did make calls to some other retailers that have multiple outlets. Grocers Schnucks and Dierbergs tell us they do not employ store-level pricing policies. However, both retailers say they sometimes lower prices at individual stores to meet prices offered by local competitors. Hardware outlets Home Depot and Lowes both tell us they also do not employ store-level pricing. Again, we did not conduct on-site surveys of any of these stores. In any event, comparisons with these stores might not be valid, as Walgreens is unique in St. Louis because of the large number of stores and because of the company's high presence in urban and minority areas.

Further Study

We may have more to report on this story in the future. Dr. Williams was so intrigued by what we found he has begun a rigorous academic study of Walgreens pricing policies in the St. Louis area. Dr. Williams says other corporations have actually cooperated with him on similar studies.

He has contacted Walgreens to ask if they will work with him for his study of St. Louis pricing practices.

He is still waiting to hear from the company.

Walgreens Response

Walgreens spokespersons tell us all prices are set at the corporate level, in Aurora, Illinois. But... they say the decision on what prices to charge at which stores is made locally -- at the district level.

To sum up Walgreens' position, the company says prices are set according to how profitable each store is. Walgreens spokespersons would not agree to an on-camera interview but they did send a lengthy email outlining several of the factors involved in determining a store's profit margin and cost of doing business.

You can read the Walgreens' e-mail response in full here: Page 1, Page 2

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