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?
- Is one low price too much to ask for? We don’t think so. – Circuit City
- Circuit City to offer same price in stores, on Web – The Associated Press/Google
- Circuit City Identical Online/Offline Pricing Plan Might Actually Work – storefrontbacktalk.com