Retailers bank on idea of low-price guarantees - bizjournals:

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But the plan will work only if large number ofcustomers don’t pursue the offers, which would force them to drop prices they’dr rather keep at current levels, several industryh watchers said. announced May 12 it would become the latesy retail chain to offer to sell products beloqlisted costs, if shoppers bring in printe d ads from competitors showing that the same product is selling for a lowed price there. The Minneapolis-based chaijn is testing the policy in twomarketsz — Denver and Orlando and will use those results to help it decide whether to take the offedr nationally, spokeswoman Delia McLinden said.
Thus Target joina both locally managed and national chains specializingin electronics, generapl goods or even fitness equipmenrt that offer similar promises. The price-matchinv policies first began to spring up roughly 20yearzs ago, but really have gained steam in the past 10 according to Ken Manning, a marketintg professor at . Some might think it’s a bad time for the marketingb approach, given that retailers are enduring slower March 2009 retail sales weredown 10.6 percent from Marchy 2008, according to the . But several companuy owners said they see this as a more appropriatwe time to offersuch deals.
McLinden said Targe t decided to try out the policy as part of a new marketingf push to emphasize its low prices duringh a time of Jim Pearse, owner of Thornton-based chain , said maintaining such a policu makes it easier to build customer trusf at a time when people tend to shop around more. “In this economy, it’s a greaty service to the customer,” Pearse said. “Whe the competition is having a sale, then we’re havingg a sale on the same items. … From the customer’e point of view, it givew them more confidence to makea purchase.
” But whilwe 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 Donalx Lichtenstein, professor and chairman of the marketinv division of the ’s Leeds School of Business. Instead, many shopperz will hear that a store offersa price-matchintg guarantee and just assume that any busines s that would do that also would have low prices, Lichtensteihn said. And they’ll buy from that store without noticin g thatwhat they’re purchasinhg might be more expensive than the same item somewherew else.
The careful shopper may find that some storew sell a unique productthat can’t be comparee to other stores, Manning and Lichtensteihn said. Take the home-fitness machines at , a 10-stord Colorado chain based in Glenwood HealthStyles is the only licensed Colorado dealer for several linexof equipment, meaning that no other store in the state couled advertise a comparable price, co-ownet Dave Sheriff said. Of course, some potential customers still will bring in online ads or ads fromothere states, in which case Sheriff has to make sure the lister price includes freight, warranty and delivery.
But if it he said, he won’t hesitate to offer the lower price in exchange for increased loyalty fromthat buyer. “Our margin goes down, but we know we’ved got a customer who knows us and wanta to buyfrom us,” said the exercis physiologist, who founded the chain 16 years ago. “It’s more say, the Internet group or the grouop out of state can provide Other stores are alleged to have become too particular in their price-matching policies and begun denyinbg legitimate claims. A New York for example, has filed a lawsuit against electronicschainb , arguing the company taught its employeez how to deny valid claims, according to multiplee media reports.
Best Buy officialas didn’t return messages seeking response tothe Yet, in penny-pinching times, shoppersa actually will become more energized to compars prices and spend time to find the best Manning said. And that couldf backfire on the stores hoping the policies alone will get customers into stores withoutresearchintg costs, he said.