In its second-largest acquisition, Amazon buys the company for $970 million.
Consumers receive a match for lower prices found online.
Target Corp. today announced that it is making its holiday price match policy permanent. The offer, which originally ran from Nov. 1 to Dec. 16, guarantees consumers that Target stores will match prices on qualifying items sold at Amazon.com Inc., BestBuy.com, Walmart.com and ToysRUs.com—including BabiesRUs.com—as well as items on Target.com.
Shoppers have seven days after making a purchase to seek a refund of the price difference if they find a lower price in a Target circular, a local competitor’s printed ad or on those e-commerce sites.
The policy assures shoppers that they’re getting low prices when they shop at Target, says Gregg Steinhafel, Target president and CEO. “Guests can confidently shop at Target every day for the best value in retail,” he says. “We know that our guests often compare prices online. With our new price match policy, Target provides an unbeatable value.”
The policy, which assures shoppers that they aren’t missing out on better deals on Target.com, is a sign that the multichannel retailer’s pricing strategies are changing, says Nikki Baird, managing partner at Retail Systems Research LLC. “The days of web-only pricing for the majority of an assortment are pretty much over,” she says.
Offering shoppers the assurance that the retailer will match competitors’ lower prices is the cost of doing business in the showrooming world, says Sucharita Mulpuru-Kodali, vice president and principal analyst at Forrester Research Inc. Showrooming is a term used to refer to consumers who enter stores to research products, then buy them online if they can find a lower price.
“Price matches for companies like Target that carry lots of commoditized goods in categories like consumer packaged goods, toys and groceries are the table stakes to maintain wallet share,” she says. She says few shoppers will actually take advantage of such a policy, meaning the cost is minimal. “It’s more of a marketing effort,” she says.
But Susan Lee, a partner at Simon-Kucher, a consulting firm that specializes in retail pricing, argues that Target's move is a mistake. “In all categories, obviously price does matter to the consumer, but it always is a matter of degree,” Lee says. “It is never the sole factor for consumers, and rarely even the predominant one when they make their decision to purchase online or in a physical store." She notes that Simon-Kucher surveyed over 1,000 consumers last year and found only 9% of those who said they buy consumer electronics online frequently would go into a bricks-and-mortar store to get a lower price. That figure was 11% for online shoppers of toys and sports equipment, and 16% for those who buy apparel online.
“Heavy online shoppers have already formed their ‘click and buy’ habit,” Lee says. “This ‘price matching’ trend cheapens a retailer’s image and doesn’t solve the problem. Price is important, but it is never the whole story.”
Target is No. 23 in the Internet Retailer Top 500 Guide. Amazon.com is No. 1, Wal-Mart Stores Inc. is No. 4, Best Buy Co. is No. 11 and Toys ‘R’ Us Inc. is No. 29.