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Target expands its online price match
Year-round strategy also at stores in competitive discount market
Question of the Day
NEW YORK — Target Corp. is pledging to match prices of select online rivals year-round, a move that underscores how physical and online retailing are being meshed together.
Matching online prices is rare but is expected to become more common as shoppers move increasingly online. Target, the nation’s second-largest discounter behind Wal-Mart Stores Inc., said it will match prices that customers find on identical products at top online retailers, all the time. The online list includes Amazon.com as well as the websites of Wal-Mart, Best Buy Co. Inc., Toys R Us and Babies R Us.
Target’s move follows a similar “holiday price match” that began Nov. 1 and ended Dec. 16. Target also is making permanent its holiday offer of matching prices of items found at its stores with those on its website. Also, for the first time, it will include products that are out of stock on Target.com.
The moves follow a disappointing holiday shopping season for the Minneapolis-based retailer, hurt by stiffer competition from online rivals and stores such as Wal-Mart that have hammered its low prices. It also is the latest step by bricks-and-mortar stores to combat “showrooming” — a growing trend for customers to browse stores to check out products, and then go online to buy the same products for less.
Mark Schindele, Target senior vice president of merchandising operations, said the discounter monitors prices of 30,000 items, and thousands more online, to make sure his company is competitive. But Target says it had to do more to give shoppers more confidence.
“We believe that our prices are competitive year-round,” Mr. Schindele said in an interview. “We also know that our guests shop in many ways.”
Many major stores have offered price-matching guarantees for local competitors’ bricks-and-mortar stores, but it wasn’t until this past holiday season that the focus was on matching online prices. Analysts say the trend will increase as stores realize that they need to wake up to the increasing shift among consumers to online, which accounted for about 10 percent of holiday sales this season. Still, such policies can be difficult in practice because online prices tend to be lower and fluctuate often.
Best Buy is matching prices with 20 online retailers on electronics and appliances at its physical stores through Jan. 31. Best Buy spokeswoman Amy von Walter would not say whether the company would make that plan permanent.
Since last summer, Toys R Us has been matching online prices for all identical items or models of baby gear from selected national competitors. Like Target, it excludes Amazon’s third-party Marketplace items.
Wal-Mart has trumpeted its low price message but stopped short of matching prices with online rivals. The Bentonville, Ark., retailer said it can monitor prices across the Web every 20 minutes. That knowledge has helped the discounter better react to the competition’s price changes.
Joel Bines, managing director of the retail practice at AlixPartners, praised retailers’ moves to online policies.
“Retailers have finally gotten the message,” he said. “You can’t put an impediment between consumers and consumption.” But he said the policies can backfire. Stores have to make it easier for shoppers to get the price match. He also noted that the move also could turn out to be “profit-draining” as more people are encouraged to shop the Web to get the lowest price.
Still, having a price match policy in place is essential for cheap chic Target, analysts say. The discounter, known for selling trendy merchandise and staples such as toothpaste under the same roof, has posted uneven sales growth since the economic downturn as it tries to convince frugal shoppers that it has good prices.
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