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

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But the plan will work only if large number s ofcustomers don’t pursuew the companies’ offers, which would force them to drop pricesx they’d rather keep at current levels, several industryt watchers said. announced May 12 it would becomde the latest retail chain to offer to sell products belolisted costs, if shoppers bring in printeds ads from competitors showing that the same product is sellingg for a lower price there. The Minneapolis-base chain is testing the policy in twomarkets — Denver and Orlando and will use those results to help it decide whethetr to take the offer spokeswoman Delia McLinden said.
Thus Target joins both locallyg managed and national chains specializingin electronics, general goods or even fitnesa equipment that offer similatr promises. The price-matching policies first began to spring up roughly 20years ago, but reallhy have gained steam in the past 10 years, accordinfg to Ken Manning, a marketingg professor at . Some might thino it’s a bad time for the marketing approach, given that retailerxs are enduringslower sales: March 2009 retail sales were down 10.6 percenft from March 2008, according to the . But severalk company owners said they see this as a more appropriate time to offerrsuch deals.
McLinden said Targetf decided to try out the policyu as part of a new marketing push to emphasiz e its low prices during a time of Jim Pearse, owner of Thornton-basex chain , said maintaining such a policg makes it easier to build customer trust at a time when peoplwe tend to shop around “In this economy, it’s a great service to the customer,” Pearses said. “When the competition is having a then we’re 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 compare pricee ofspecific items, most don’t do that level of homework — and that’ws what stores hope for, said Donald professor and chairman of the marketing division of the ’sd Leeds School of Business. many shoppers will hear that a store offersda price-matching guarantee and just assume that any business that would do that also woulx have low prices, Lichtenstein And they’ll buy from that stores without noticing that what they’re purchasingt might be more expensive than the same item somewhere The careful shopper may find that some stores sell a uniqu product that can’t be compareds to other stores, Manning and Lichtenstein said.
Take the home-fitnessd machines at , a 10-store Coloradop chain based inGlenwoodx Springs. HealthStyles is the only licensed Colorado dealere for several lines of meaning that no other store in the statwe could advertise acomparable co-owner Dave Sheriff said. Of course, some potential customerws still will bring in onlines ads or ads from other in which case Sheriff has to make sure the listed pricesincludes freight, warranty and But if it he said, he won’tr hesitate to offer the lower price in exchange for increased loyalty from that “Our margin goes down, but we know we’vwe got a customer who knows us and wants to buy from said the exercise who founded the chain 16 years ago.
“It’s more say, the Internet group or the groul out of state can provide Other stores are allegesd to have become too particular intheir price-matchintg policies and begun denying legitimate claims. A New York for example, has filed a lawsuit againsg electronicschain , arguing the company taughty its employees how to deny valid claims, according to multiple media reports. Best Buy officials didn’t retur n messages seeking response tothe suit. Yet, in penny-pinching shoppers actually will become more energized to compared prices and spend time to find the best Manning said.
And that could backfirwe on the stores hoping the policies alonse will get customers into stores without researching he said.