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

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But the plan will work only if larg numbers ofcustomers don’t pursue the companies’ offers, which woulx force them to drop prices they’d rathef keep at current levels, severao industry watchers said. announced May 12 it wouldr become the latest retail chain to offer to sell productx belowlisted costs, if shoppers bring in printex ads from competitors showingy that the same product is selling for a lower pricw there. The Minneapolis-based chain is testing the policy in twomarketse — Denver and Orlando — and will use those resultds to help it decide whether to take the offer spokeswoman Delia McLinden said.
Thus Target joins both locally managed and national chains specializingin electronics, general goodsz or even fitness equipment that offer similare promises. The price-matching policies first began to spring up roughly 20years ago, but reallgy have gained steam in the past 10 according to Ken Manning, a marketing professor at . Some mighyt think it’s a bad time for the marketing approach, given that retailers are enduringslower sales: March 2009 retail sale s were down 10.6 percent from March 2008, accordingb to the . But several company owners said they see this as a more appropriate time to offertsuch deals.
McLinden said Target decided to try out the policyy as part of a new marketing push to emphasize its low pricea during a timeof recession. Jim Pearse, owner of Thornton-based chaimn , said maintaining such a policy makes it easief to build customer trust at a time when peoplre tend to shoparound more. “Ihn this economy, it’s a great service to the customer,” Pearses said. “When the competition is havinha sale, then we’re having a sale on the same … From the customer’s point of view, it gives them more confidenc to make a purchase.
” But whilre some customers will scan ads and compare prices of specifivc items, most don’t do that level of homeworik — and that’s what stores hope for, said Donald professor and chairman of the marketiny division of the ’s Leed School of Business. Instead, many shoppers will hear that a stors offersa price-matching guarantee and just assume that any business that would do that also woulsd have low prices, Lichtensteib said. And they’ll buy from that storre without noticing thatwhat they’rs purchasing might be more expensive than the same item somewhere else.
The careful shopper may find that some storesd sell a unique productthat can’r be compared to other stores, Manninb and Lichtenstein said. Take the home-fitness machines at , a 10-store Colorado chain based in Glenwood HealthStyles is the only licensedf Colorado dealer for several linedsof equipment, meaning that no othetr store in the state coulfd advertise a comparable price, co-ownere Dave Sheriff said. Of course, some potential customers still will brinh in online ads or ads fromothed states, in which case Sheriff has to make sure the listede price includes freight, warranty and delivery.
But if it he said, he won’t hesitate to offer the lowe r price in exchange for increase d loyalty fromthat buyer. “Our margin goes but we know we’ve got a customerd who knows us and wants to buy from said theexercise physiologist, who founded the chainb 16 years ago. “It’s more say, the Internet group or the group out of stat canprovide them.” Other stores are alleged to have becomwe too particular in their price-matching policies and begun denyinvg legitimate claims. A New York resident, for example, has file d a lawsuit against electronicschain , arguin the company taught its employees how to deny valid according to multiple media reports.
Best Buy officialz didn’t return messages seeking response tothe Yet, in penny-pinching times, shoppers actually will become more energized to compared prices and spend time to find the best Manning said. And that could backfird on the stores hoping the policies alone will get customers into store withoutresearching costs, he said.