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Retailers Turn to Price Matching to Compete

Posted by admin on 2/24/13 10:00 PM
Topics: college retail, showrooming, eCommerce, textbook affordability, price comparison

The following excerpt, from the article Best Buy Swears Shoppers Don’t Have to Bother Showrooming Anymore, was written by Brad Tuttle, who covers business and personal finance for TIME. The article proves that even the biggest brands are turning to price matching guarantees as a way to combat online retail giants such as Amazon.

With the launch of a new price-matching guarantee, electronics giant Best Buy promises “the end of showrooming”—the increasingly popular practice in which shoppers scope out merchandise in a store and then buy it for less money online.

Brick-and-mortar-based retailers like Best Buy have been losing out on sales for years thanks to the rise of showrooming. Consumers simply got into the habit of inspecting merchandise in person in stores, before whipping out their smartphones to shop around for a better price. After using the physical store as a mere showroom, shoppers would ultimately purchase the item online, often via Amazon, the world’s largest e-retailer.

At first, physical retailers ignored showrooming, for the most part. They said that it didn’t matter much—that in-store customer service combined with shoppers’ need for immediate gratification would win out. But then, without really admitting the power of showrooming, retailers started battling back. Target stopped selling Amazon’s Kindle, sending the message that Target would no longer play ball with a company that’s actively trying to steal away its customers. Many retailers introduced or increased the number of exclusive products it sold: If you’re the only retailer selling an item, after all, you don’t have to worry about a competitor undercutting you on price.

Leading into the 2012 holiday shopping season, the showrooming squabbles reached a new intensity. Best Buy and Target both introduced the holiday season with unprecedented new price-matching guarantees that extended to online sellers such as Amazon for the first time ever.

What’s most noteworthy about the new price guarantees is that they seem to imply that consumers no longer have much need to shop around. It’s OK to put your guard down, we’re looking out for you: That’s the message retailers want consumers to come away with thanks to the new guarantees. Hey, we’re guaranteeing the lowest price!

In reality, these price guarantees only work when consumers shop around as aggressively as ever. Shoppers must still do all of the usual legwork involved in showrooming. The onus is on them to find the lowest price. It’s just that now, they have more options as to where to get that price.

Lately, we've seen many college stores adopting similar strategies, such as Forty-Niner Shops whose Price Match Guarantee we covered last year on Foreword Online. So, tell us, what do you think of these guarantees: are they effective? Does your store offer one? Share your thoughts in the comments section below.

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