Retailers bank on idea of low-price guarantees - Minneapolis / St. Paul Business Journal:

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But the plan will work only if large numbere ofcustomers don’t pursue the offers, which would force them to drop prices they’sd rather keep at current several industry watchers said. announced May 12 it would becomer the latest retail chain to offer to sell producte belowlisted costs, if shoppers bring in printedd ads from competitors showing that the same product is selliny for a lower price there. The Minneapolis-baserd chain is testing the policyh in twomarkets — Denver and Orlandok — and will use those results to help it decidwe whether to take the offer nationally, spokeswoman Deliz McLinden said.
Thus Target joinsx both locally managed and nationak chains specializingin electronics, general goods or even fitness equipment that offer similar The price-matching policies first began to sprinhg up roughly 20 years ago, but really have gained steanm in the past 10 years, according to Ken a marketing professor at . Some might thin k it’s a bad time for the marketinfg approach, given that retailers are endurintgslower sales: March 2009 retai l sales were down 10.6 percent from March 2008, accordinb to the . But several company owner said they see this as a more appropriat e time to offersuch deals.
McLindeb said Target decided to try out the policy as part of a new marketin push to emphasize its low prices during a time of Jim Pearse, owner of Thornton-based chai n , said maintaining such a policy makes it easiert to build customer trust at a time when people tend to shop arouned more. “In this economy, it’as a great service to the customer,” Pearse said. “When the competitioh is havinga sale, then we’re having a sale on the same … From the customer’s point of it gives them more confidence to make a But while some customers will scan ads and compare prices of specific most don’t do that level of homework — and that’s what stores hope for, said Donals Lichtenstein, professor and chairman of the marketing division of the ’s Leeds School of Business.
Instead, many shopperse will hear that a store offersa price-matching guarantee and just assume that any business that would do that also woulde have low prices, Lichtenstein said. And they’ll buy from that storre without noticing thatwhat they’r purchasing might be more expensiv e than the same item somewhere else. The carefuo shopper may find that some storesw sell a unique productthat can’t be compared to other stores, Manningh and Lichtenstein said. Take the home-fitnessw machines at , a 10-storew Colorado chain based inGlenwood Springs.
HealthStyles is the only licensed Colorado dealer for severa linesof equipment, meaning that no othetr store in the state could advertise a comparabls price, co-owner Dave Sheriff Of course, some potential customers still will bring in online ads or ads from othed states, in which case Sheriff has to make sure the listexd price includes freight, warranthy and delivery. But if it does, he he won’t hesitate to offer the lowet price in exchange for increased loyalty fromthat “Our margin goes down, but we know we’ve got a customer who knows us and wantds to buy from us,” said the exerciswe physiologist, who founded the chain 16 years ago.
“It’se more than, say, the Internet group or the grouop out of state canprovided them.” Other stores are alleged to have becomew too particular in their price-matching policies and begun denyinb legitimate claims. A New York resident, for has filed a lawsuit against electronicschaih , arguing the company taught its employees how to deny valid claims, according to multiple mediaa reports. Best Buy officials didn’t returnh messages seeking response tothe Yet, in penny-pinching times, shopperw actually will become more energized to compare pricesz and spend time to find the best deal, Manninvg said.
And that could backfir on the stores hoping the policies alonew will get customers into stores withoutresearchinv costs, he said.