Target takes price-matching to a whole new level


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.
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.
- Target Unveils Changes to Price Match Policy – A Bullseye View
- Target expands price-matching policy to 29 rivals – Minneapolis Star Tribune (tiered sub)
- Target to match online prices with online rivals – The Associated Press
- Walmart’s Price Matching Policy
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?
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21 Comments on "Target takes price-matching to a whole new level"
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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.
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.”
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.
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.
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.
This would be a nightmare at store checkout.
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.
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.
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.
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.
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.
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.
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!
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.
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.
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.
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?