Optimism abounds for the upcoming holiday shopping season as retailing industry analysts predict sales gains in the neighborhood of 4 percent. Christmas sales are key to a successful year for retailers, so they are preparing to be very competitive this year. One area in which many retailers are focusing is pricing, specifically being price competitive with online sellers like Amazon. Brick-and-mortar retailers are fully aware of savvy shoppers roaming their stores armed with mobile apps that enable foster price comparisons with a quick swipe of a bar code as well as the ability to search the Internet for information and reviews. Fearful that shoppers will walk out of their stores to buy online, many retailers are touting their willingness to match price.
Meeting competitors' prices is hardly a new practice in retailing. During my four years spent in retail management in the late 1980s, competitive shopping trips were a regular item on my to-do list. Technology has made price shopping easier for retailers and of course, customers. While a retailer does not want to lose a customer just because a competitor down the road (or online) is selling the same product for $5 less, a sole focus on price as a competitive tool is not productive long-term.
Matching competitors' prices should be used as a move to negate any advantage competitors might realize from charging less. Communicating a price matching policy is wise, particularly for a retailer like Target that is proactively promoting price matching to inform potential customers that lower prices found elsewhere, including online, can be matched by Target. However, a long-term view should be taken with regards to what will keep a customer coming back to a store.
As a consumer, I am grateful when a store is willing to meet a lower price offered by a competitor. I will gladly take them up on their offer. But, meeting competitors' prices does not inspire me to visit a store again in the future. The total experience of doing business with a retailer is much more influential - merchandise presentation, customer service, and feeling like my business is valued matter to me. Meeting price is a cost of doing business, not a customer relationship strategy.
Retailers should adopt a price matching policy but realize that it only gets them a tie with competitors. If parity is the goal, then playing for a tie is acceptable. But, if you are playing for the win the total customer experience still cannot be beaten.
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Labels: Customer Experience, Pricing, Retailing