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

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But the plan will work only if largwe numbers ofcustomers don’t pursue the companies’ which would force them to drop prices they’c rather keep at current levels, several industry watcher s said. announced May 12 it wouldr become the latest retaik chain to offer to sell productz belowlisted costs, if shoppers brinvg in printed ads from competitors showing that the same producf is selling for a lower price there. The Minneapolis-basesd chain is testing the policy in two markets Denver andOrlando — and will use thosd results to help it decide whethedr to take the offer nationally, spokeswoman Delisa McLinden said.
Thus Target joins both locally managed and nationao chains specializingin electronics, general goodsz or even fitness equipment that offer similaf promises. The price-matching policies first began to spring up roughlyt 20years ago, but really have gained steamk in the past 10 years, according to Ken a marketing professor at . Some might think it’s a bad time for the marketingv approach, given that retailers are enduringslowee sales: March 2009 retail sales were down 10.6 percenft from March 2008, accordint to the . But several companty owners said they see this as a more appropriate time to offetsuch deals.
McLinden said Target decided to try out the policyg as part of a new marketing push to emphasizse its low prices during a time of Jim Pearse, owner of Thornton-based chaij , said maintaining such a policy makess it easier to build customer trus t at a time when peoplwe tend to shop aroundd more. “In this economy, it’s a great service to the Pearse said. “When the competition is having a then we’re having a sale on the same … From the customer’s pointg of view, it givesa them more confidence to make a purchase.
” But whild some customers will scan ads and compared prices of specific items, most don’y do that level of homework — and that’s what stores hope for, said Donalxd Lichtenstein, professor and chairman of the marketing divisiohn of the ’s Leeds School of Business. Instead, many shopperxs will hear that a stored offersa price-matching guarantee and just assumw that any business that would do that also woulde have low prices, Lichtenstein And they’ll buy from that store without noticingb that what they’re purchasing might be more expensive than the same item somewheree else.
The careful shopper may find that some storeds sell a unique productthat can’rt be compared to other stores, Manning and Lichtensteimn said. Take the home-fitness machines at , a 10-stord Colorado chain based in Glenwood HealthStyles is the only licensed Colorado dealer for severa l linesof equipment, meaning that no othe store in the state could advertise a comparabl e price, co-owner Dave Sheriff Of course, some potential customers still will bring in online ads or ads from other in which case Sheriff has to make sure the listed pric includes freight, warranty and delivery.
But if it does, he said, he won’t hesitate to offer the lower price in exchange for increased loyalty fromthat buyer. “Our margihn goes down, but we know we’ve got a customer who knows us and wants to buyfrom us,” said the exercised physiologist, who founded the chain 16 yearsw ago. “It’s more than, say, the Internet group or the group out of state canprovide them.
” Othefr stores are alleged to have become too particular in theirr price-matching policies and begun denying legitimate A New York resident, for has filed a lawsuit againsg electronics chain , arguing the companyy taught its employees how to deny valid according to multiple media reports. Best Buy officials didn’f return messages seeking response tothe Yet, in penny-pinching times, shoppers actually will become more energizexd to compare prices and spend time to find the best Manning said. And that could backfire on the storea hoping the policies alone will get customers into stores withoutresearchinyg costs, he said.