Web pricing offered at Circuit City

Same costs as online offered in stores

By Michael Felberbaum, ASSOCIATED PRESS | Monday, October 20, 2008

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RICHMOND | Circuit City Stores Inc. has started offering the same prices in its stores as on its Web site in an effort to beef up its rapport with customers in hope of increasing store traffic and sales, the company announced last week.

Retailers sometimes offer different prices on Web sites and in stores, although some retail consultants say such practices can make customers less trusting when they find out about them.

The move comes as the nation's No. 2 electronics retailer heads into a crucial holiday shopping season that could determine its future amid a weak consumer spending environment that has even the least vulnerable retailers worried.

"[It's] no secret this holiday season is probably one of the most important ones in our history as a company, and with these equities in place, we feel pretty good about it," said Jeff Maynard, Circuit City's vice president of marketing.

"At the end of the day, what this is all about is trust. When consumers look at this promise ... I think they will be very impressed with the prices that we're putting out there."

Under the new One Price Promise policy, the company will automatically charge the same price through all of its sales channels, which also include a call center.

The policy expands Circuit City's Unbeatable Price Guarantee, which matched lower prices from its Web site and those of bona fide local competitors upon the customer's request.

In some cases, online retail channels have offered lower prices than those of brick-and-mortar stores, allowing companies to make more money on in-store sales; in other cases, in-store pricing was lower. Mr. Maynard said the company believes any loss in margin will be "more than made up for by the value of the equity in terms of building and driving more traffic."

But consumers would be shocked to find price differences between sales channels, and Circuit City's move just corrects a practice that has lost it traffic in the past, said George Rosenbaum, chairman of Leo J. Shapiro and Associates, a Chicago retail research firm.

"They've committed a cardinal sin, and now their promise of one price ... it'll be a ho-hummer, it'll be 'so what,' because that's the expected norm," Mr. Rosenbaum said.

Ellen Davis, vice president for the National Retail Federation, said research from its online arm, Shop.org, shows 70 percent offer consistent pricing across sales channels.

"What retailers are trying to do by creating consistent pricing is give customers the option to shop wherever they want to shop, however they want to shop, as long as it's with them," Miss Davis said. "With retailers understanding that consumers are on a budget, it makes sense to create pricing structures that will make it easier for them to shop."

Circuit City is pushing the initiative through print, broadcast, Internet and in-store marketing and hoping to gain market share over its largest competitors, including Best Buy Co. and Wal-Mart Stores Inc.

"We think this is a compelling enough offer that engenders trust with consumers that we'll see some share shift," Mr. Maynard said. "We're counting on taking some business from our competitors."

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