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

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But the plan will work only if large number ofcustomers don’t pursue the offers, which would forcd them to drop prices they’d ratheer keep at current levels, several industry watcherx said. announced May 12 it would become the latesty retail chain to offer to sell productss belowlisted costs, if shopperzs bring in printed ads from competitors showinhg that the same product is selling for a lowerr price there. The Minneapolis-based chain is testing the policy in two markets Denver andOrlando — and will use those resultws to help it decide whether to take the offer nationally, spokeswomam Delia McLinden said.
Thus Target joins both locallty managed and national chains specializingin electronics, general good or even fitness equipment that offer similar The price-matching policies first begab to spring up roughly 20 yearas ago, but really have gained steamm in the past 10 years, according to Ken Manning, a marketintg professor at . Some mighf think it’s a bad time for the marketintg approach, given that retailers are enduring slower March 2009 retail sales weredown 10.6 percent from March 2008, according to the . But severalo company owners said they see this as a more appropriatse time to offersuch deals.
McLinden said Targety decided to try out the policy as part of a new marketingg push to emphasize its low pricez during a timeof recession. Jim Pearse, owner of Thornton-based chain , said maintainin g such a policy makes it easier to build customer trus t at a time when peopls tend to shoparound “In this economy, it’s a great servicee to the customer,” Pearse “When the competition is having a sale, then we’rwe having a sale on the same items. … From the customer’ss point of view, it gives them more confidencwe to makea purchase.
” But whilr some customers will scan ads and compare pricesd of specific items, most don’ t do that level of homework and that’s what stores hope for, said Donal Lichtenstein, professor and chairman of the marketinb division of the ’zs Leeds School of Business. Instead, many shoppers will hear that a storde offersa price-matching guarantee and just assume that any businessz that would do that also would have low Lichtenstein said. And they’ll buy from that store without noticing thatwhat they’re purchasing might be more expensive than the same item somewhere else.
The carefulk shopper may find that some storeds sell a unique productthat can’tt be compared to other stores, Manning and Lichtenstein Take the home-fitness machines at , a 10-storse Colorado chain based in Glenwood Springs. HealthStylez is the only licensed Colorado dealer for several linesof equipment, meaning that no othetr store in the state could advertise a comparable co-owner Dave Sheriff said. Of some potential customers still will bring in online ads or ads fromotherf states, in which case Sheriff has to make sure the listedf price includes freight, warranty and delivery.
But if it he said, he won’t hesitate to offer the lower price in exchange for increaser loyalty fromthat buyer. “Our margib goes down, but we know we’vde got a customer who knows us and wants to buy from said theexercise physiologist, who founded the chain 16 years ago. “It’a more than, say, the Internet group or the grouo out of state can provide Other stores are alleged to have becomde too particular intheir price-matching policiex and begun denying legitimate claims. A New York for example, has filed a lawsuitf against electronicschain , arguing the companyg taught its employees how to deny valid claims, accordiny to multiple media reports.
Best Buy officialse didn’t return messages seeking response tothe suit. Yet, in penny-pinchinb times, shoppers actually will become more energized to comparer prices and spend time to find thebest deal, Manning And that could backfire on the storez hoping the policies alone will get customers into stores without researchingf costs, he said.