Circuit City Promises Same Prices Offline and Online
By Tom Ryan
Circuit City has become the first national retailer to guarantee the same prices in its stores as on its website. The “One Price Promise” policy is designed to complement its “Unbeatable Price Guarantee” to help reinforce price integrity and its value message with consumers.
“At the end of the day, what this is all about is trust,” Jeff Maynard, Circuit City’s vice president of marketing, told The Associated Press. “When consumers look at this promise … I think they will be very impressed with the prices that we’re putting out there.”
Retail consultants told The Associated Press that retailers sometimes offer different prices online than offline, often benefiting from the higher price ranges. Mr. Maynard said the company believes any loss in margin will be “more than made up for by the value of the equity in terms of building and driving more traffic.”
Circuit City is pushing the initiative through a print, broadcast, internet and in-store marketing.
“We think this is a compelling enough offer that engenders trust with consumers that we’ll see some share shift,” Mr. Maynard said. “We’re counting on taking some business from our competitors.”
George Rosenbaum, chairman of Leo J. Shapiro and Associates, doesn’t believe such a move will resonate with consumers because they expect the same prices.
“It’ll be a ho-hummer, it’ll be ‘So what,’ because that’s the expected norm,” Mr. Rosenbaum said.
But Ellen Davis, vice president for The National Retail Federation, said its online research arm, Shop.org, shows that 70 percent of retailers offer consistent pricing across sales channels and greater consistency gives consumers more confidence to shop across channels.
“With retailers understanding that consumers are on a budget, it makes sense to create pricing structures that will make it easier for them to shop,” Ms. Davis said.
StorefrontBacktalk’s Evan Schuman said Circuit City could gain customer goodwill at little cost since prices are already similar due to intense competition in the consumer electronics space. But he wonders what would happen if other retailers mimicked the move.
“If they do follow, there are some interesting implications,” writes Mr. Schuman. “It would mean that a cross-channel retailer would never be able to offer a product online for less than it can afford to offer in-store, unless it raised pricing somewhere else to make up for the loss. Would that give a tactical advantage to pure-play e-tailers who would be under no such restriction?”
Discussion Questions: What do you think of Circuit City’s move to guarantee the same online and offline prices? Do you think other retailers will increasingly make similar moves? What will be the pros and cons as well as the challenges of moving to uniform offline and online pricing across retail?
I would expect, as a consumer, as most intelligent retailer have already figured this out, that the prices would already be consistent. If not, that is a red flag; buyer beware. Not sure I would wrap it up as a national announcement….
I think a higher return would be seen by investing in value driven targeted direct marketing, not 1980s PR ploys.
Since the Circuit City TV commercial doesn’t “name names,” it only implies that Best Buy is the guilty party. So this may be somewhat “inside baseball” stuff for people who have been following stories about the disconnect between Best Buy’s online and in-store prices for awhile. Best Buy has established so many other competitive advantages over Circuit City (locations, the Geek Squad, etc.) that I’m not if sure this will resonate.
Bravo to Circuit City! Nothing is more frustrating than doing online research about a product, then going to the brick and mortar store to buy it, only to find a higher price and being told by a sales associate that the store will not match its own online price.
This is what a seamless consumer experience should be. One price.
It’s ridiculous in the first place to think that consumers would have been both foolish and tolerant enough to accept multiple prices from the same company, regardless of whether it was in-store or online. This is just a common sense campaign that will probably be a winner for them as consumers now (if they didn’t before) have a reason to be skeptical about the pricing of items in other stores.
From a customer perspective, if I see a price online and I go to a store and there is a more expensive price in-store, I would probably ask them to match the price (and in most cases they will). I floated the question to some of my friends who are not involved in retail to gauge response and the feelings were similar. If its more expensive in-store, they would ask to match it. If the store did not match it, they would take the price to their competitor to match it (as most retailers have a price match guarantee regardless).
CC should focus on service and selection in-store as apposed to highlighting something that customers already know and expect. It’s up to their merchandising department to make sure prices are aligned.
Transparency anyone?
Pricing parity across offline and online channels has been common practice in travel for the last few years after so many issues, so it is not surprising to see, at least from Circuit City.
Whether Circuit City can affect Best Buy at this point is harder to forecast as Best Buy has so many market (customer) advantages now. At least it’s start for CC…they need all the help they can get at this point.
“Trust” IS the operative word here and lack of price parity has been retail’s dirty little secret since channel surfing became a national pastime. The next challenge? Wrestling with the price disparity problem that is multiplying as “hyper localized” assortments become the new standard. In this world, individual stores have unique brand, product and pricing propositions. How’s that going to fly as folks see significant price variances, not just from bricks to clicks to catalog but also from uptown to downtown?
CC is in deep trouble as we head into this Holiday. The consumer is focused on price. This message allows them a chance to garner unique, relevant, differentiated awareness. Trend folks are calling for a second coming of “cocooning” as a result of the financial mess. The general bunker mentality provides CC with a hope to take share over the next quarter, the market is certainly not going to grow. And with the shortened Holiday selling season, pricing should be a veritable donnybrook.
I think it is a breakthrough and smart first step. But CC must campaign with it and follow it up over the next 10 weeks with equally (if not more) compelling reasons to “drop the mop” in order to maintain any consumer “bump” it enjoys from the announcement.
This year will definitely prove the axiom: “retail ain’t for sissies.”
This is pretty much “blah, blah, blah” from Circuit City for a few reasons: First, shouldn’t online prices match in-store prices? Isn’t that a no-brainer? Why celebrate this supposed breakthrough? Rosenbaum is right.
Second, how does CC intend to ameliorate their shipping charges for online orders to make internet purchasing from them equal or superior to visiting one of their stores?
And third, how does CC intend to knit together their return policies from both purchasing alternatives? Right now I know from personal experience that it’s not working.
Guaranteeing the same prices through all channels–in-store, Internet, catalog, and mobile–is not a big deal. First, most retailers offer the same prices now and consumers typically think that a retailer will offer the same prices. Second, if this offer turns out to have appeal to consumers, competitors will simply offer the guarantee. Thus, it is unlikely that Circuit City can gain a sustainable competitive advantage through this offer.
Circuit City’s stock is 20 cents a share. So that pretty much is an indication of what Wall Street thinks of their ideas. Second, what retailer doesn’t already do this? I don’t know of any store what would turn someone away because the price online was lower than in the brick and mortar store. All the customer has to do is request that the store honor the online price or they are walking out. Do you think Best Buy would let someone leave over $20 on a $1000 item? Of course not. All Circuit City is doing is making the customer not have to work so hard to get the discount.
This has been an issue before and was especially annoying when the store didn’t match its own online advertised price. I think Circuit City has a very good angle here but I doubt that it will make a dent in Best Buy’s business. I think CC is too far gone to make a comeback at this point, and that is a shame in my opinion. If they had done this sooner, it might have made a difference.
This is a good first step for CC, but it will not save them from the continuing erosion of their franchise. Their product selection, customer service and pricing all need to improve.
CC has a unique opportunity to attract consumers to come into their stores over the T-Day weekend, and demonstrate an entirely new model. To do this they must first offer a home run against all of the critical marketing issues that have plagued them including best of breed, incredible pricing, good product selection, great customer service, and incredible ad items. Once they start to offer this, it will give consumers the reason they are looking for to come back.
BTW, CC is not a competitor to Best Buy any longer. Instead, they need to position themselves as a deep pocket discounter with a better than expected consumer store experience.
Sell at low prices to everyone across every channel. Is this not common practice?
Unfortunately, I am amongst those skeptical that this will be any form of “silver bullet” for Circuit City. Having said that, I am in complete agreement that this is something which should be baseline for multi-channel retailers. I am, however, aware of the technical limitations some retailers may have had in implementing such a move, particularly in highly promotional environments with 1 hour sales, 5 hour sales, early bird specials and all the other forms of fast-promotions many brick and mortar operators use. Linking the ecommerce channel into the underlying data system (in effect treating it like another “store”) may not be possible for some retailers.
Will this give CC a competitive advantage? I wish. We need CC to survive. My impression is that CC is or should be in crisis management operating mode. Crisis mode, as the Harvard Business Review recently defined it, requires cross-functional initiatives which radically alter current operational norms and market positioning. A Same Price Guarantee simply doesn’t feel like such an initiative.
With all due respect, this feels like a “tweak” or like polishing the railing on the Titanic after it’s already hit the iceberg.
I’m not inside CC, so I can’t give crisis management insights. I can, however, observe behavior and wonder why this initiative is worthy of the fanfare.
All electronics retailers have the same awful problem: margins stink. Nobody wants to be one cent higher than anyone else online. But few can profitably pay legit overheads with tiny margins. Circuit City can make its customers happy with consistent prices, but the shareholders won’t be happy. J.C. Penney, Staples, and many other well-run retailers gave up consistent pricing long ago. If it isn’t profitable, it’s not sustainable.