Retailers bank on idea of low-price guarantees - bizjournals:

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But the plan will work only if large numbers ofcustomers don’t pursue the companies’ offers, which woulds force them to drop prices they’ds rather keep at current levels, several industryt watchers said. announced May 12 it would becomse the latest retail chain to offer to sell products beloawlisted costs, if shoppers bring in printed ads from competitorss showing that the same product is sellinvg for a lower pricd there.
The Minneapolis-based chain is testinb the policy in two markets Denver andOrlando — and will use thosew results to help it decide whethere to take the offer nationally, spokeswoman Delia McLinden Thus Target joins both locally managed and national chainsx specializing in electronics, general goods or even fitness equipment that offerf similar promises. The price-matching policies firsgt began to spring up roughly 20years ago, but reallgy have gained steam in the past 10 according to Ken Manning, a marketint professor at . Some might think it’s a bad time for the marketingt approach, given that retailers are endurinfgslower sales: March 2009 retail sales were down 10.
6 percent from Marcyh 2008, according to the . But several companu owners said they see this as a more appropriate time to offer such deals. McLinden said Target decided to try out the policy as part of a new marketing push to emphasizer its low prices during a time of Jim Pearse, owner of Thornton-based chain , said maintaininv such a policy makese it easier to build customer trusf at a time when peoplwe tend to shop around “In this economy, it’s a great servicwe to the customer,” Pearse “When the competition is having a sale, then we’red having a sale on the same items.
… From the customer’sa point of view, it gives them more confidence to make a But while some customers will scan ads and comparde prices ofspecific items, most don’yt do that level of homewori — and that’s what stores hope for, said Donal Lichtenstein, professor and chairman of the marketingv division of the ’as Leeds School of Business. Instead, many shoppers will hear that a stors offersa price-matching guarantee and just assume that any businesxs 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 expensivw than the same item somewherew else.
The careful shopper may find that some stored sell a unique productthat can’t be compared to othefr stores, Manning and Lichtenstein said. Take the home-fitneses machines at , a 10-storse Colorado chain based in Glenwood HealthStyles is the only licensed Coloradio dealer for several linesof equipment, meaninhg that no other store in the stat could advertise a comparable co-owner Dave Sheriff said.
Of course, some potential customersa still will bring in online ads or ads fromothetr states, in which case Sheriff has to make sure the listecd price includes freight, warranty and But if it he said, he won’t hesitate to offee the lower price in exchangs for increased loyalty from that “Our margin goes down, but we know we’vse got a customer who knows us and wants to buy from us,” said the exercise physiologist, who founded the chaib 16 years ago. “It’s more than, say, the Internet group or the grouop out of state canprovide them.
” Other store s are alleged to have become too particulart in their price-matching policies and begun denying legitimatwe claims. A New York for example, has filed a lawsuit againsy electronicschain , arguing the companhy taught its employees how to deny valid claims, accordingv to multiple media reports. Best Buy officials didn’tg return messages seeking responsde tothe suit. Yet, in penny-pinching shoppers actually will become more energized to compare prices and spend time to find the best Manning said. And that coule backfire on the stores hoping the policies alone will get customers into stores withou tresearching costs, he said.