Target goes all-out with price match

  • Article by: JOHN EWOLDT , Star Tribune
  • Updated: January 8, 2013 - 9:13 PM

The retailer is extending its holiday policy to a year-round one.

Target is extending its holiday price-matching policy to 365 days a year.

The Minneapolis-based retailer said Tuesday that it will match prices that customers find at Amazon.com, Walmart.com, Bestbuy.com, Toysrus.com and Babiesrus.com, as well as matching its own online prices.

It's part of an ongoing effort by major retailers to combat showrooming, in which shoppers check out items in a store but then buy cheaper online. Many retailers, including Target and Best Buy, had price-matching offers during some or all of the holiday season.

Analysts had expected them to stick to the holidays-only approach. But chief industry analyst Marshal Cohen of the NPD Group said a very competitive environment is pressuring brick-and-mortar stores.

"Consumers shifted their spending in the fourth quarter," Cohen said. "They bought only the items they needed in fear of going off a fiscal cliff of their own."

Target's policy, which expands on an existing ad-match policy, applies to items to be purchased at the register and previous purchases made within seven days. If a customer buys an item at a Target store and then finds the identical item for less elsewhere within one week, Target will match the price.

Other retailers aren't following suit -- yet. Best Buy's holiday program, which matched select Internet retailers, will expire Jan. 31, and officials with the Richfield-based retailer declined to comment on whether it will offer year-round matching. It currently matches local retailers and 20 Internet retailers on electronics and appliances.

University of St. Thomas marketing Prof. David Brennan expects the electronics retailer to follow Target's lead. "There is a herd mentality that if one does it, then others feel the need to do it as well," he said.

Significant savings

The price-match savings for consumers can add up, according to William Blair & Co., a financial-services firm in Chicago. Its survey found that Target's prices are about 14 percent higher than Amazon's.

With the new price-match policy, Target is finding a way to erase the online price advantage. While Target's customers pay sales tax and Amazon's don't, Target's Redcard customers receive an additional 5 percent discount on each purchase and don't pay shipping costs.

Gary Hopkins of Eagan had Target match Amazon's prices on five items during the holidays, including a propane camping stove and Blu-ray movies. He scans items on his smartphone while in the store and has Guest Services validate the lower online price.

"I haven't had any issues at all," he said.

Still, observers expect relatively few consumers to take advantage of the price-match policies. While Target, Best Buy, Toys R Us and even Amazon offered the match during the holidays, fewer than 5 percent of shoppers asked for it, Cohen estimated.

Target and other retailers are offering matching for consumers' peace of mind, he said. "Even if consumers don't ask for a price match, they feel comfortable that they are dealing with a fair-priced retailer who is price conscious."

That might be part of the reason that Target feels comfortable offering the match year-round, said Brennan -- because so few shoppers will take advantage of it.

Wal-Mart's policy

Target's close competitor Wal-Mart has a year-round price-match policy, but it has not officially extended it to online retailers. Some consumers have reported the retailer matching online prices on a case-by-case basis through a manager, but the official policy does not include it.

Brennan said Wal-Mart is in a Catch-22 situation: If it extends its price-match policy to include online goods, it will prompt shoppers to ask why a retailer that touts itself as the "low price leader" needs to match prices.

Target began offering an ad-match policy in 2009 and began matching a number of online retailers during the holidays. The new policy combines Target's previous ad-match offers with the select online competitors.

Target also will match prices on out-of-stock items on Target.com, which previously were excluded. It will not match varying prices among Target locations, spokeswoman Jenna Reck said.

Customers asking for a price match should take items to the Guest Services counter, which now has signs that explain the program details.

Cohen said he thinks retailers and consumers win under the price-match policy. "For very little expense, the retailer wins a customer. No one wants the customer to walk. Why lose them on price?"

jewoldt@startribune.com • 612-673-7633

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