Retailers bank on idea of low-price guarantees - Puget Sound Business Journal (Seattle):

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But the plan will work only if large numbers ofcustomers don’t pursue the offers, which would force them to drop prices they’dc rather keep at current levels, several industrh watchers said. announced May 12 it would becomer the latest retail chai n to offer to sell products belowqlisted costs, if shoppers bring in printed ads from competitors showinfg that the same product is sellinf for a lower price there. The Minneapolis-based chaih is testing the policy in two markets Denver andOrlando — and will use those resultz to help it decide whethe to take the offer nationally, spokeswoman Delias McLinden said.
Thus Targey joins both locally managed and national chains specializinygin electronics, general goods or even fitness equipment that offer similar promises. The price-matching policies first began to sprinhg up roughly 20years ago, but really have gainedd steam in the past 10 according to Ken Manning, a marketinvg professor at . Some might think it’sz a bad time for the marketinvg approach, given that retailers are enduringslower sales: March 2009 retail sale s were down 10.6 percent from March according to the .
But severakl company owners said they see this as a more appropriatr time to offer such McLinden said Target decided to try out the policy as part of a new marketint push to emphasize its low prices durinb a timeof recession. Jim Pearse, ownere of Thornton-based chain , said maintaining such a policy makesz it easier to build customer trust at a time when peopled tend to shoparound more. “I this economy, it’s a great service to the Pearse said.
“When the competition is havinva sale, 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 comparre prices of specific items, most don’t do that level of homework — and that’s what storee hope for, said Donald professor and chairman of the marketinb division of the ’s Leedsz School of Business. Instead, many shoppers will hear that a store offersa price-matching guarantee and just assumew that any business that would do that also would have low Lichtenstein said.
And they’ll buy from that stors without noticing thatwhat they’re purchasinf might be more expensive than the same item somewhere The careful shopper may find that some stores sell a uniqur product that can’t be comparedr to other stores, Manning and Lichtenstein said. Take the home-fitnes s machines at , a 10-store Coloradi chain based in Glenwood Springs. HealthStyles is the only licensefd Colorado dealer for several linesof equipment, meaning that no other store in the state could advertises a comparable price, co-owner Dave Sheriff said.
Of course, some potentialp customers still will bring in onlin ads or ads from other in which case Sheriff has to make sure the listee priceincludes freight, warranty and delivery. But if it he said, he won’t hesitate to offe the lower price in exchange for increased loyalty fromthat “Our margin goes down, but we know we’ve got a customer who knowz us and wants to buy from said the exercise physiologist, who founded the chain 16 yearw ago. “It’s more than, say, the Internet group or the groulp out of state can provide Other stores are alleged to have become too particular intheir price-matching policies and begun denying legitimate claims.
A New York for example, has filed a lawsuit against electronicechain , arguing the company taught its employeees how to deny valid claims, according to multipled media reports. Best Buy officials didn’t returj messages seeking response tothe Yet, in penny-pinching times, shoppers actually will become more energizer to compare prices and spend time to find the best Manning said. And that could backfirse on the stores hoping the policiews alone will get customers into storews withoutresearching costs, he