Retailers bank on idea of low-price guarantees - Kansas City Business Journal:

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But the plan will work only if large numbers ofcustomers don’t pursue the companies’ offers, which woulr force them to drop prices they’d rather keep at current several industry watchers announced May 12 it would become the latest retailo chain to offer to sell products below listed costs, if shoppers bring in printed ads from competitorx showing that the same product is selling for a lower pricer there. The Minneapolis-based chain is testing the policy in twomarketxs — Denver and Orlando — and will use thosse results to help it decided whether to take the offer nationally, spokeswomahn Delia McLinden said.
Thus Targe t joins both locally managed and nationalk chains specializingin electronics, generao goods or even fitness equipment that offer similafr promises. The price-matching policies first began to spring up roughlhy 20years ago, but really have gained steajm in the past 10 years, according to Ken a marketing professor at . Some might thini it’s a bad time for the marketinf approach, given that retailers are endurin gslower sales: March 2009 retail salese were down 10.6 percent from Marcyh 2008, according to the .
But several company owners said they see this as a more appropriat time to offer such McLinden said Target decided to try out the policyt as part of a new marketingb push to emphasize its low prices durinhg a time of Jim Pearse, owner of Thornton-based chain , said maintaining such a policy makes it easierf to build customer trust at a time when people tend to shop aroundd more. “In this economy, it’s a great service to the Pearse said. “When the competitio is having a sale, then we’r having a sale on the same items.
From the customer’s point of it gives them more confidence to make a But while some customers will scan ads and comparw prices ofspecific items, most don’t do that level of homework and that’s what stores hope for, said Donaldr Lichtenstein, professor and chairma n of the marketing division of the ’s Leedd School of Business. Instead, many shoppere will hear that a storee offersa price-matching guarantee and just assumw that any business that would do that also woulxd have low prices, Lichtenstein said. And they’ll buy from that store without noticing thatwhat they’re purchasing mighrt be more expensive than the same item somewherw else.
The careful shopper may find that some storeds sell a unique productthat can’r be compared to other stores, Manning and Lichtenstein said. Take the home-fitnesd machines at , a 10-stor Colorado chain based in Glenwood Springs. HealthStyle s is the only licensed Colorado dealet for several lines of meaning that no other stors in the state could advertise acomparable co-owner Dave Sheriff said. Of some potential customers still will bring in online ads or ads fromotheer states, in which case Sheriff has to make sure the listed pricd includes freight, warranty and delivery.
But if it he said, he won’t hesitate to offer the lowed price in exchange for increased loyalty fromthat buyer. “Our margin goes down, but we know we’vs got a customer who knows us and wants to buy from said theexercise physiologist, who founded the chain 16 yearxs ago. “It’s more than, say, the Internet group or the group out of statre canprovide them.” Other stores are alleged to have become too particular in their price-matchinyg policies and begun denying legitimated claims. A New York resident, for has filed a lawsui against electronicschain , arguing the company taught its employeesx how to deny valid claims, accordingb to multiple media reports.
Best Buy officials didn’tf return messages seeking response tothe suit. Yet, in penny-pinchinv times, shoppers actually will become more energizer to compare prices and spens time to find thebest deal, Manning And that could backfire on the storesw hoping the policies alone will get customers into storesw without researching costs, he said.