With its same-store sales flat in December after dipping 1% in November, Target Corp. is sharpening its competitive edge by promising to match in its stores prices offered online by its competitors as well as by Target's own e-commerce site.
Target, making permanent a price-matching policy tested during the holidays, promises its stores will match prices on qualifying items sold on rival e-commerce sites Amazon.com, BestBuy.com, Walmart.com and ToysRUs.com as well as on Target.com. "We know that our guests often compare prices online," chairman, president and CEO Greg Steinhafel says.
Sucharita Mulpuru, vice president and senior analyst at Forrester Research Inc., says price-matching is becoming a cost of doing business as retail chains fight "showrooming," the trend of store shoppers checking for better deals online and buying on the web instead of in the store.
But retailers should be wary of price-matching policies, which can cause them to unnecessarily forfeit profit margins, warns Susan Lee, partner with retail consultants Simon-Kucher. Price "is rarely the predominant factor when consumers make their decision to purchase online or in a physical store," she says.
Six new web-only brands
Another way Target hopes to influence shopping and purchasing decisions is through the launch last month of six brands exclusive to Target.com. "We're excited about these new brands and how they're helping us further differentiate Target.com from other online retailers," divisional merchandise manager Theresa Schmidt says.
The brands are: Labworks for women's apparel; Zutano Blue for infant clothing; Room 365 for colorful bedding products; Boho Boutique for table linens, bedroom and bath products; Too by Blu Dot for home décor products; and MudHut, which features bedding and other products.
The web-only brand strategy is getting mixed reviews from industry analysts. "Target has always done well in telling a good brand story in its stores, and this is an extension of that strategy," says Jim Okamura, managing partner of retail consultancy Okamura Consulting.
But Paula Rosenblum, managing partner at research and advisory firm Retail Systems Research LLC, contends that selling online-only brands doesn't make sense for a retailer that sells primarily through stores, and that web exclusives are better suited to testing new brands before offering them in stores, or clearing out excess merchandise.
The task of making these new policies work will fall to Jason Goldberger, hired last month as the new senior vice president of Target.com and mobile.
Goldberger most recently was executive vice president of home, kids, taste and business development at members-only e-retailer Gilt Groupe Inc. Before that he spent four years at e-retailer Hayneedle Inc. and eight years at No. 1 web retailer Amazon.com Inc.