Best Buy has already promised it. Target followed suit quickly. And Walmart has suggested it might take up the practice as well. It appears that, faced with the tough price competition provided by online retailers, U.S. retail giants are all reacting the same way, though according to some observers, that way may not be the best way.
Specifically, retailers recognize that many consumers, while shopping in stores, check out the look and feel of a product, then turn on their smartphones to check the price of the same item on Amazon or another online site. If the Amazon price is better (which it nearly always is), they simply click to purchase and leave the store without any packages. This form of showrooming is straining brick-and-mortar stores’ profits. The problem appears likely to be especially acute during the holiday shopping season, as customers seek the best bargains and then avoid busy malls.
Price-matching tactics have come to seem like the only option for many retailers. If they do not match the low prices, they cannot convince customers to buy from them. But according to some analysts, this option is a terrible one. By adopting this strategy, the in-store retailers are competing on the online retailers’ field. If they concede that price is the only thing that matters, then they give up their own strategic advantage.
Malls are still fun places for many people, where they meet friends, enjoy the atmosphere (especially around the holidays), and have an opportunity to drop in to a new or unfamiliar store. In addition, many shoppers cite the vast importance of a friendly sales staff in determining where and when they purchase. By trying to compete on price, the brick-and-mortar retailers actually may be causing more harm, in that they will have fewer resources available to devote to hiring and training great staff or making the environment more welcoming and inviting.
The dilemma certainly is not an easy one, and consumers are not particularly sympathetic. But the holiday season is fast approaching, and popular retailers have some tough choices to make if they hope to be the site that gets shoppers to open their wallets.
Source: Ann Zimmerman and Elizabeth Holmes, “Target to Match Online Prices, Following Best Buy,” The Wall Street Journal, October 16, 2012; Ann Zimmerman, “Holiday Price Matching Could Backfire for Retailers,” The Wall Street Journal, October 18, 2012
Kyle T. said:
I feel that this price matching strategy is actually quite a good idea for companies. It provides a great incentive for customers to visit a store, especially because they may see a product they really like at one store and instead of buying their other needed products from different stores, they may choose to stay in that one store. Companies who execute properly on these strategies could really benefit, and those who do not will realize it and will never do it again. I feel it is the only way these physical stores can beat online retailers, who continue to sell items at low prices as well as continue to update their web pages to try and recreate the feeling of shopping in a store in a virtual setting. If companies with brick-and-mortar stores do not find innovative ways to compete, like price matching strategies, they will soon become a thing of the past and that is why I believe these strategies could keep retailers alive despite the changing environments.