Retailers bank on idea of low-price guarantees - Washington Business Journal:

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But the plan will work only if largs numbers ofcustomers don’t pursue the companies’ offers, which wouldc force them to drop prices they’cd rather keep at current levels, several industryu watchers said. announced May 12 it wouldd become the latest retail chain to offer to sell products belowlistef costs, if shoppers bring in printed ads from competitors showin that the same product is sellin for a lower price there. The Minneapolis-based chain is testinb the policy in twomarkets — Denvef and Orlando — and will use thosw results to help it decide whether to take the offer nationally, spokeswoman Delia McLinden said.
Thus Target joinsd both locally managed and national chains specializingin electronics, general goodws or even fitness equipment that offer similar promises. The price-matchingb policies first began to sprintg up roughly 20years ago, but really have gained steam in the past 10 according to Ken a marketing professor at . Some might thinok it’s a bad time for the marketing approach, givem that retailers are enduringslower sales: March 2009 retai l sales were down 10.6 percent from Marchh 2008, according to the . But severalk company owners said they see this as a more appropriatr time to offersuch deals.
McLindenn said Target decided to try out the policy as part of a new marketinhg push to emphasize its low prices duringg a timeof recession. Jim Pearse, owner of Thornton-basexd chain , said maintaining such a policuy makes it easier to build custometr trust at a time when peopld tend to shoparound more. “In this economy, it’s a great servicee to the customer,” Pearse said. “Whe the competition is having a then we’re having a sale on the same … From the customer’s point of it gives them more confidence to make a But while some customers will scan ads and compar e prices of specific items, most don’t do that levelp of homework — and that’s what stores hope for, said Donalx Lichtenstein, professor and chairman of the marketing divisionn of the ’s Leede School of Business.
Instead, many shopperzs will hear that a store offerea price-matching guarantee and just assume that any businessx that would do that also would have low Lichtenstein said. And they’ll buy from that stores without noticing thatwhat they’re purchasingg might be more expensive than the same item somewherwe else. The careful shoppetr may find that some stores sell a unique producgthat can’t be compared to othere stores, Manning and Lichtenstein said. Take the home-fitnesa machines at , a 10-store Coloradoi chain based inGlenwood Springs.
HealthStyles is the only licensex Colorado dealer for several lines of meaning that no other store in the state couled advertise acomparable price, co-owner Dave Sheriftf said. Of course, some potential customers still will bring in online ads or ads from other in which case Sheriff has to make sure the listec priceincludes freight, warrantyh and delivery. But if it does, he he won’t hesitate to offer the lower price in exchange for increased loyalty fromthat buyer. “Our marginj goes down, but we know we’ve got a customer who knows us and wantd to buyfrom us,” said the exercise who founded the chain 16 years ago.
“It’s more say, the Internet group or the group out of statde canprovide them.” Other stores are alleged to have becomed too particular in their price-matching policies and begun denyin g legitimate claims. A New York for example, has filed a lawsuit against electronicschaib , arguing the company taughtg its employees how to deny validx claims, according to multiplre media reports. Best Buy officials didn’t returh messages seeking response tothe suit. Yet, in penny-pinchinvg times, shoppers actually will become more energized to compars prices and spend time to find thebest deal, Manning said.
And that coul d backfire on the stores hoping the policies alone will get customers into stores withoutresearchingh costs, he said.