[Image of: RetailWire Logo and Tagline (for print)]
 
[8 comments]

Will Online Price Matching Boost Toys "R" Us?

August 26, 2013

Toys "R" Us, Inc. last week said it was enhancing its "Price Match Guarantee" on items available in its Toys "R" Us and Babies "R" Us stores nationwide to include selected online retailer pricing.

The retailer will now match online pricing from Walmart.com, Target.com, BestBuy.com, Sears.com, Kmart.com, buybuyBaby.com, Meijer.com, FredMeyer.com, diapers.com, BabyDepot.com and Amazon.com on in-store purchases of identical items. Amazon.com price matching excludes Amazon Marketplace.

Online price matching adds to its previous policy of matching competitors' in-store pricing on identical items when a shopper presents a local retailer's current, valid print advertisement.

"We want to take away any concerns our customers might have about maximizing their budgets," said Richard Barry, the retailer's EVP and chief merchandising officer, in a statement. "With online shopping growing rapidly, the addition of online competitors to our already strong Price Match Guarantee enables consumers to take advantage of our vast assortment of toys and juvenile products, while being assured they are getting the best price."

Price Match is given at the time of checkout. Customers can also receive a price adjustment retroactively at a store if a purchased item is advertised at a lower price at a local competitor within seven days of their original purchase.

The price matching won't cover online-only deals, nor competitors' online prices over the Black Friday/Cyber Monday period when TRU will be running other exclusive promotions instead.

Best Buy Co. appears to be the only other national retailer to match online prices as well as those from circulars, heralding online price matching as an anti-showrooming tool. Both Target and Walmart's price match guarantees exclude internet pricing.

Internet Retailer also noted that electronics e-tailer Newegg, flash-sales site Fab.com, and payments processor PayPal have all tested online price matching.

Discussion Questions:

Is Toys "R" Us taking a big risk by offering online price matching? Do you expect the strategy to spread broadly to other retail categories or does it only make sense for certain ones?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

What's the likelihood that many other retailers will offer some version of online price matching this holiday season?

Comments:

Toys "R" Us is leveling the playing field for the growing online shoppers. It is a smart move and sets the bar for the rest of the industry. The next move may be to have toys made exclusively for them so no one can match the price, as many CES retailers did a few years back. I would be upset if I was a .com retailer they did not feel strong enough to mention in their list of matching retailers!

[Image of: View Braintrust Panelist button]
Frank Riso, Principal, Frank Riso Associates, LLC

If price is a level playing field, then as a retailer you need to focus on something that will separate you from the pack. Like customer service, store associates, ease of shopping online, Private Label items, and exclusive items.

In my opinion, as an industry we tend to focus too much attention to price and not enough on something that could really be meaningful.

As a necessary move by Toys "R" Us, I just hope they also spend time crafting something special to separate them from the pack.

[Image of: View Braintrust Panelist button]
John Boccuzzi, Jr., Managing Partner, Boccuzzi, LLC

Numerous RetailWire discussions have centered around the wisdom of price matching for both online and brick and mortar stores. The Toys "R" Us press release outlines the ten criteria that must be met before they will meet the competitor's price online is its local print ads, nine of which directly apply to its online price match. I can envision what will happen when trying to meet this criteria: "Online prices must be verifiable via competitor website."

The value in price matching is in the perception that a retailer is so confident in their pricing that they are not concerned that a customer will find a lower price. The reality of actually matching the price because of the mechanics required means those customers behind the person seeking the price match will be inconvenienced. Internally, if I were a clerk, I would like to be trained on what is and is not acceptable and the assurance that additional staff will be available to keep the lines moving.

[Image of: View Braintrust Panelist button]
Steve Montgomery, President, b2b Solutions, LLC

I agree with the direction Steve Montgomery has gone. In prep for this post, I tried the new price match on TRU. It was cumbersome and unpleasant. I have two observations. First, if price match is indeed a distinguishing feature, then I'd like to see software which automatically does it for the consumer. If there are only 8 websites you match, and if there are conditions for pricing to meet, this seems perfect for a nifty application. Do that for me, and I am actually engaged with your commitment to matching price.

Second, I'm wondering where this fascination with price matching comes from in the online world. Is it from the belief that because products are essentially commodities and the online store is essentially the same, then price comparability becomes a requirement? Who said the online stores are essentially the same? Bells and whistles, added content, chat, support, engaging graphics...all of these cost money. Why is it that we think consumers will not pay slight price differences for a different/better experience online, when we absolutely think they will in the brick and mortar world?

Don Delzell, Managing Director, Retail Advantage

Toys "R" Us is taking a bold and necessary step to attempt to level the playing field this holiday season. Toys "R" Us is limited in what they sell so they have to have a draw to get customers in the door. The competitors have a broader inventory and shelf space loaded with many more items, so the Toys "R" Us draw is important.

I see a major hiccup in this. There are too many "ifs" in the price match policy. Seems they are making it difficult on both the customer and cashiers. I hope they plan to train the staff or this program can backfire badly on them.

[Image of: View Braintrust Panelist button]
Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

Many people were skeptical when Best Buy made their price match guarantee permanent earlier this year, and yet Best Buy announced strong quarterly results last week.

Although I agree that price is certainly not the only decision factor for consumers and that retailers should continue to focus on ways they can add value for their consumers, we cannot deny the importance of price when consumers make purchase decisions. With price transparency at an all-time high, this move by Toys "R" Us seems somewhat inevitable.

As for other categories, there is a high degree of correlation between the level of price transparency in a specific category, and the degree to which price matching is implemented by retailers in that category; in other words, the more price-transparent the category, the more that we can expect to see price matching initiatives being implemented.

[Image of: View Braintrust Panelist button]
Alexander Rink, CEO, 360pi

I understand the psychology of this—we guarantee we're the lowest, so no need to shop elsewhere—and if it were like-for-like (i.e. TRU online vs. competitor online) I could see logic in it. But this seems to be apples vs. washed, sliced and set-in-a-bowl for you organic apples; the whole rationale for lower online prices is that there is a lower cost structure behind them and in return, you give up things (availability, seeing the merchandise, etc.). This would seem to work only if few people actually take them up on it...or it's one he** of a loss leader.

'notcom'

Price Matching (online) is a great step, but it's not a silver bullet.

Jerry Storch, the then CEO of Toys "R" Us gave at keynote at Shop.org in 2012 in which he famously asserted that the TRU supply chain was "not at all" disadvantaged vs. Amazon, and that he could easily compete with internet pricing.

Offering a permanent internet price match policy is a powerful psychological tool to combat fear of buyers remorse over pricing issues.

The realities of price matching are of course much more complicated. As others have said, it's not currently a pleasant customer-centric experience to avail yourself of a price match. And matching with online is only going to make it much more complicated. Several of the firms TRU promises to price match against offer regional and/or custom pricing, which is going to make verification a mess. And Amazon adjusts pricing as often as 9 times a day!

[Image of: View Braintrust Panelist button]
Jason Goldberg, VP Commerce Strategy, Razorfish

Search RetailWire
Follow Us...
[Image of:  Twitter Icon] [Image of:  Facebook Icon] [Image of:  LinkedIn Icon] [Image of:  RSS Icon]

RetailWire's
Getting Started video!

View this quick tutorial and learn all the essentials...

RetailWire Newsletters