Target takes price-matching to a whole new level

Discussion
Oct 01, 2015
George Anderson

Price matching is a common tactic in retailing with chains typically identifying a small number of key competitors whose prices they will meet. Beginning today, Target — at stores and target.com — is taking the practice to a new level by expanding its price-matching list from five to 29 competitive e-commerce sites.

According to a posting on A Bullseye View site, Target looked at competitors with products that overlapped its assortment to include in its price-matching program. The full list includes: Amazon.com, Babiesrus.com, BedBathBeyond.com, Bestbuy.com, BN.com, Buybuybaby.com, Costco.com, CVS.com, Diapers.com, DicksSportingGoods.com, Drugstore.com, Gamestop.com, JCPenney.com, Kmart.com, Kohls.com, Macys.com, Newegg.com, Officedepot.com, Petco.com, Petsmart.com, Samsclub.com, Sears.com, SportsAuthority.com, Staples.com, Target.com, Toysrus.com, Ulta.com. Walgreens.com, Walmart.com and Wayfair.com.

Target price match

Source: Target

Target has also expanded the timeframe for customers seeking a price match. Previously, the company’s stores would honor a price match for a period of up to seven days after a purchase. The period has now been extended to 14 days for Target stores and target.com.

The retailer’s decision to expand its list and redemption period may be more about improving its price perception with consumers than risking profit margins. According to a Minneapolis Star Tribune report, fewer than five percent of consumers ask merchants to match prices because of the perceived hassle in doing so.

Part of the hassle involves presenting an exact item from a competitor to qualify for a match. Target’s decision to include Costco and Sam’s Club on its list is unlikely to turn up many exact product matches since the warehouse clubs specialize in bulk purchases and Target does not.

Walmart, Target’s chief rival, matches prices with 30 competitors. Its list includes dollar stores and auto parts retailers not matched by Target.

How will Target’s expanded price-matching program affect its pricing perception among consumers? Will the change be a net positive or negative for Target?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"The reason a company opts to "match" prices is because their prices are uncompetitively high in the first place. At least that’s the way consumers will see it."
"Net of everything, it will be a price-driven holiday season this year and Target is "battening down the hatches" to keep their large footprint alive and well."
"It’s definitely a smart move on Target’s part. Price match policies let consumers shop with confidence, and very few consumers actually use the policy."

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21 Comments on "Target takes price-matching to a whole new level"


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Ryan Mathews
Guest
4 years 10 months ago
The reason a company opts to “match” prices is because their prices are uncompetitively high in the first place. At least that’s the way consumers will see it. What price matching offers say to smart shoppers is, “We will charge you more than we should unless you catch us and then we will patronize you by adjusting the price to save the sale. Of course … if you don’t catch us … shame on you!” As to the impact, let’s face it, price matching works to save sales, but always at the expense of margin. Training your shoppers to shop the competition in search of the lowest price or use an app to track cost options isn’t a formula for building up long-term customer loyalty. So if Target really wants to boost the number of disloyal price shoppers and/or cherry pickers it serves, it’s a brilliant strategy. Oh … and there is that whole brand image problem. If Target suddenly positions itself as a discounter across all imaginable channels, what does it do to that… Read more »
Richard J. George, Ph.D.
Guest
4 years 10 months ago

It may have some positive customer perception. However, to realize any significant customer attitude change the program needs to do more than simply match competitors’ prices. Obviously, anything beyond matching such as 10 percent discount over competitors’ prices would drive more positive price perceptions among consumers than a price-matching program. Not knowing Target’s CGS, the additional discount may have a deleterious effect on the bottom line.

While I understand the impact of price transparency, I question whether this quasi price war is the best long term option. My expression “anyone can give product away, it takes brains to sell it” may be applicable in this situation. Target needs to consider all options beyond price discounting that may provide a competitive advantage.

Warren Thayer
Guest
4 years 10 months ago

I know others have complained about this previously, but Ryan is too smart and too quick. He needs to slow down some to let us less smart and less quick people respond first. As for the questions, my response is, “What Ryan said.”

Camille P. Schuster, PhD.
Guest
4 years 10 months ago

This plan will make no difference. First, not all items qualify. Second, the consumer has to check Target’s website and/or the websites of all the competitors on every qualified item to find differences before getting a benefit. Third, price is only one part of customers’ value equation and not always most important. What are the other elements of that value equation for Target consumers? Is focusing on price the best strategic move to win loyalty from Target consumers? Fourth, even if consumers do all the work and find that Target had the lowest price the consumers are not going to be happy because they put in a lot of time and get no reward. Fifth, the process implies that Target is abdicating their role in working to keep their prices competitive and want the consumers to do the work for them.

George Nielsen
Guest
4 years 10 months ago

Maybe retailers need to have the fortitude to say to their customers, “We had that product on sale last week, it may be back on sale in the near future. Check our flyer.” Chasing others is not a strategy.

Mark Price
Guest
Mark Price
4 years 10 months ago
As we go into the holiday season, it is wise of Target to recognize that the competitive set for their consumers is greater than five e-commerce retailers. As it was for Best Buy several years ago, it is critical that Target not lose significant share of all their customers to online competitors during the holidays. The net impact will be to reduce gross margin while maintaining or increasing market share. Target has always had a high quality, average price perception among consumers. Now that consumers have easy access to prices across a broad range of e-commerce retailers, the need to be price-competitive is even more so as well. As the article suggests, one way that retailers such as Target can address the risks of price-driven competition is to have manufacturers create custom products for them. Those products cannot be exactly matched by competition, which provides a bit of price insulation for the company. Net of everything, it will be a price-driven holiday season this year and Target is “battening down the hatches” to keep their… Read more »
Max Goldberg
Guest
4 years 10 months ago

This is a strong public relations move for Target. Their store slogan was about to become “Expect Less, Pay More.” They know that few people will bother with the price match and chose to go on the offensive. Target still has a long way to go before becoming a low-price leader in almost any category.

Cathy Hotka
Guest
4 years 10 months ago

This would be a nightmare at store checkout.

W. Frank Dell II
Guest
4 years 10 months ago

The first consumer reaction will be: see, they were not cheap, we should have shopped at XYZ. Pricing a whole store versus the competition is not really a good idea. It forces the retailer to reduce its margin when it did not have to. Volume and big-ticket items provide a retailer’s price image. An item purchase once or twice a year has little impact on the consumer for the middle income and above groups. Longer term this should help Target, but it will never replace good marketing and merchandising.

Peter Fader
Guest
4 years 10 months ago

I’m glad to see the reasonably strong consensus of negative sentiment here. Price matching is generally a bad idea, and this particular campaign doesn’t seem to be an exception to that rule. Target should know better — and should do better.

Jason Goldberg
Guest
4 years 10 months ago

It’s definitely a smart move on Target’s part. Price match policies let consumers shop with confidence, and very few consumers actually use the policy. It tells consumers that Target is serious about its e-commerce business (which has been on a growth spurt of late).

Walmart’s innovative price match program, Savings Catcher, has been a huge success (adding it to their mobile app caused their active users to jump from 4M to 14M in one month). However, Walmart’s Savings Catcher doesn’t let in-store customers match prices with Walmart’s own e-commerce site, which is just silly.

An interesting side note on Target’s policy is that it includes Walmart, Amazon, and Costco, but not jet.com. I wonder if Target didn’t want to match Jet’s aggressive pricing, if the dynamic nature of Jet’s pricing was too problematic, or if Jet just doesn’t have enough mind share with Target guests to matter.

Lee Peterson
Guest
4 years 10 months ago

I think it’s a “duh.” Don’t you have to do this now with online shopping being so prevalent? All that nonsense about showrooming from all retailers, well, here’s their chance to take that off the table. 100% price match. Another reason to go private label. Welcome to the 21st Century.

Robert Heiblim
Guest
Robert Heiblim
4 years 10 months ago

As Best Buy’s Joly stated, these are the table stakes. Equally important then to the Target announcement will be how it is implemented, and what specifically they will do to let their shoppers know and understand they are “right’ on price.

Larry Negrich
Guest
4 years 10 months ago

Yes, good PR. Keeps Target positioned as discounter with low prices. Also continues the march towards online product commoditization—not the conga line to join, but at this point in online evolution better to be on the line than sitting in the seats.

Lee Kent
Guest
4 years 10 months ago

The way I look at it, Walmart gave their customers an app, Savings Catcher, that basically begged them to prove that Walmart was the lowest price. Either by default or by matching, doesn’t matter.

So, Target sticks their toe in the water and offers to match. Great, they are in the game.

But here’s the deal. If the shopper is all about lowest price, Walmart is the hands down place to shop. But what if they prefer Target and do more shopping there for whatever reason? Are they going to hop in the car and go to Walmart for just certain items?

So, Target expands their list and saves the sale. How big is that pool of shoppers? From what I read and hear, not so big, so not a big risk to margins.

Win-win, for my 2 cents!

Li McClelland
Guest
Li McClelland
4 years 10 months ago

This is way too much work for customers to go through and very few will bother. The momentary press release and announcement will get Target’s name in the news for free—again. I do not expect their price-matching program to have much benefit to Target, or anyone else, beyond that.

Gordon Arnold
Guest
4 years 10 months ago
The tactic of encouraging your base to visit other stores for comparative pricing in a downward spiraling economy is dangerous if you don’t own the lowest prices for any and all product/service you sell. If you have store out-of-stocks for A or B velocity product, the plan of action will most likely further erode market share. With so many people working two jobs or long hours of overtime just to make ends meet the convenience of one stop shopping is an interesting offer to the customers with non entitlement incomes. This approach only demands stringent inventory on hand controls to keep their eyes off of the price sales. This client category is more prone to indulge in impulse sales as well as stockpiling to save time in the future. The first step in making money is going where the money is, followed by having what those with the money are looking for in stock and ready to go. Adding service ahead of competitive pricing will make the most of the plan to keep the consumer’s… Read more »
Shep Hyken
Guest
4 years 10 months ago

Target is known for value pricing. Now they are saying they’ll price match even more stores. That creates some consumer confidence about getting the best value. That may work.

The negative is that low prices don’t always translate into the best service. Target has pushed to give consumers a better service experience. Low price retailers can provide a good level of service and still maintain their pricing. They may have fewer staff on the floor. As a result, they may no longer be able to compete on the service component of their value proposition.

kim maguire
Guest
kim maguire
4 years 10 months ago

Price matching is simply the “price of entry” for any serious mass merchant. To those who say it only implies you have high prices to begin with, does that mean since Walmart is such an advocate of price matching that you believe they have high prices?

It’s not a big deal one way or the other and I seriously doubt Target will spend much of its marketing budget on the “price match guarantee.” I am sure Target will enforce the “Expect More” part of their slogan versus the “Pay Less” as it is the merchandising and operational differentiation that will continue to be their strength.

Paul Stanton
Guest
Paul Stanton
4 years 10 months ago

It is a start in the right direction. Hopefully this will encourage them to reduce everyday prices after they get some results. I don’t believe they have a good price image now. Perhaps this will wake them up?

Onn Manelson
Guest
4 years 10 months ago
Yes, if the new price-matching guidelines create enough of a buzz (looks like it is), this will start to impact its brand perception and price image. Research shows that there are many factors that contribute to the consumer’s perception, one of which is price-match policies. If the objective of this move is to improve its price perception with consumers, then Target will need to review all factors that affect brand image, including the retailer’s physical store and website, promotion type, advertising, as well as level of service, to get the full impact on customers’ perception. We discuss price image further in our blog: “7 Facts Every Retailer Needs to Know About Price Image.“ If Target’s bottom line is going to benefit from this move we are yet to see. As long as the new policy draws in more customers and sales, while maintaining a balance of non-abusive levels of use of the policy, then Target will benefit. Target will need to monitor closely in order to assess the effectiveness of the policy and if this… Read more »
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Braintrust
"The reason a company opts to "match" prices is because their prices are uncompetitively high in the first place. At least that’s the way consumers will see it."
"Net of everything, it will be a price-driven holiday season this year and Target is "battening down the hatches" to keep their large footprint alive and well."
"It’s definitely a smart move on Target’s part. Price match policies let consumers shop with confidence, and very few consumers actually use the policy."

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