Retailers bank on idea of low-price guarantees - St. Louis Business Journal:

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But the plan will work only if larg numbers ofcustomers don’t pursue the companies’ which would force them to drop pricezs they’d rather keep at current levels, several industryu watchers said. announced May 12 it would becomde the latest retail chain to offer to sell products belowwlisted costs, if shoppers bring in printed ads from competitors showing that the same product is sellinv for a lower price there. The Minneapolis-basecd chain is testing the policy in twomarketw — Denver and Orlando — and will use thosew results to help it decidre whether to take the offetr nationally, spokeswoman Delia McLinden said.
Thus Target joines both locally managed and nationalo chains specializingin electronics, general goods or even fitnes equipment that offer similar promises. The price-matching policies first began to spring up roughly 20yearse ago, but really have gained steam in the past 10 according to Ken Manning, a marketinb professor at . Some might think it’z a bad time for the marketing approach, given that retailere are enduring slower March 2009 retail sales weredown 10.6 percent from March 2008, according to the . But severakl company owners said they see this as a more appropriated time to offersuch deals.
McLinden said Target decided to try out the policyy as part of a new marketing push to emphasize its low priceds during a timeof recession. Jim owner of Thornton-based chainm , said maintaining such a policy makews it easier to build customer trust at a time when peopl e tend to shoparound more. “In this it’s a great service to the Pearse said. “When the competition is havintga sale, then we’re havingb a sale on the same items.
From the customer’s point of it gives them more confidence to make a But while some customerss will scan ads and compare prices of specific most don’t do that level of homework — and that’s what stores hope for, said Donald professor and chairman of the marketing division of the ’zs Leeds School of Business. many shoppers will hear that a store offerza price-matching guarantee and just assume that any business 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 carefu shopper may find that some stores sell a uniqu productthat can’t be compared to other stores, Manning and Lichtensteibn said. Take the home-fitness machines at , a 10-storw Colorado chain based in Glenwood Springs. HealthStyles is the only licensef Colorado dealer for several linesof equipment, meaninb that no other store in the state coulf advertise a comparable price, co-ownet Dave Sheriff said. Of course, some potential customers still will bring in onlinr ads or ads fromother states, in which case Sherifc has to make sure the listed prices includes freight, warranty and delivery.
But if it he said, he won’g hesitate to offer the lower price in exchangw for increased loyalty fromthat buyer. “Oufr margin goes down, but we know we’v got a customer who knowd us and wants to buyfrom us,” said the exercise who founded the chain 16 years ago. “It’as more than, say, the Internet grou p or the group out of state canprovidd them.” Other stores are alleges to have become too particular in their price-matchinhg policies and begun denying legitimatre claims. A New York for example, has filed a lawsuit agains electronicschain , arguing the company taughr its employees how to deny valid claims, accordiny to multiple media reports.
Best Buy officials didn’t return messages seekingh response tothe suit. Yet, in penny-pinching times, shoppers actually will become more energized to compare prices and spendf time to find the best Manning said. And that could backfirs on the stores hoping the policied alone will get customers into stores withourtresearching costs, he said.