Retailers go beyond (below) price-matching for the holidays

Discussion
Sources: Academy Sports + Outdoors, Lowe's, Fry's Electronics, Target
Nov 18, 2016
Tom Ryan

Academy Sports + Outdoors this holiday season is joining other retailers in offering to not only match competitor’s prices, but to beat them.

Under its “Price Match + 5%” guarantee, if a customer shows a competitor’s price is lower, Academy will beat it by five percent. As typical with many retailers, customers must show a print copy of the competitor’s ad or a digital version of the ad on their phone.

Academy offers a chat option and a phone number for its customers shopping online to validate the ad and earn the price adjustment. Shoppers have 14 days post-purchase to come back for an adjustment.

The move appears unusual among larger chains and could be a response to greater competition from Dick’s Sporting Goods. The nation’s leading sporting goods chain recently opened its first doors in Houston. Nearly half of Academy’s stores are in Texas.

Among other major chains, Lowe’s promises to beat competitor prices by 10 percent. Home Depot makes the same promise, but with more restrictions.

Fry’s Electronics price matches on the initial purchase, but offers a post-purchase price-beat guarantee. If you buy an item at Fry’s and then find a lower price elsewhere within 30 days of purchase, the retailer will refund 110 percent of the difference. For electronics items, the price-match period is 15 days.

Most retailers only match the prices of nearby competitors at the same price. For consumers, the price-matching offers seen as more generous (or advantageous, valuable, liberal, etc.) promise to match a wider range of retailers. Some, for instance, won’t price match Amazon as well as the warehouse clubs and dollar stores. Others don’t match any Internet-only retailers.

Last year, Target extended its price-matching list from five to 29 competitive e-commerce sites. It also moved to honor a price match for a period of up to 14 days after purchase, versus seven previously.

DISCUSSION QUESTIONS: Would you advise retailers in some situations to beat price-match guarantees this holiday season? Generally, when are price-match offerings too generous?

Please practice The RetailWire Golden Rule when submitting your comments.
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10 Comments on "Retailers go beyond (below) price-matching for the holidays"


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Ori Marom
Guest

Retailers are forced to match online prices. This is exactly why retailers are dying.

The only thing that could free retailers from the obligation to match online prices (and thereby perish) is a fundamental change in their business model.

We can think of alternative models in which stores are paid by both customers, online competitors and suppliers for rendering product display and referrals, as well as other valuable services.

In any case, ANY retailer that matches online prices will not survive.

Bob Phibbs
BrainTrust

There’s always somebody cheaper, always.

The race to the bottom on pricing for a minority of shoppers who enjoy this won’t mask the fact that for most, shopping in stores is work, lonely, and something they don’t enjoy doing. If you want to compete, you create an exceptional experience for everyone who walks into your store that day.

Sterling Hawkins
BrainTrust

Price matching is a dangerous game, especially with all the personalization and targeted offers out there these days. I think there’s some solace in the fact that there’s probably more PR value out of these things than margin loss when all is said and done. Giving customers a comfort level that their prices are competitive is an import position for some retailers.

Lyle Bunn (Ph.D. Hon)
Guest

Price-matching is a battle for loyalty fought on every purchase and the toughest of competitors will win that loyalty for the price of a little less margin. Every price-match challenge is an engagement opportunity in-store. So for the brand positioning as a high value provider, the slight reduction in margin, the additional store visit and the interaction between customer and store staff, the strategy makes sense. The PR value far outweighs margin surrendered. The real issue is that of turning the policy off when that element of marketing/communications is less needed.

Jasmine Glasheen
BrainTrust
Jasmine Glasheen
Principal Writer & Content Strategist, Jasmine Glasheen & Associates
2 years 9 months ago

Soon retailers will be paying customers to take their products. Companies that want to make a profit have to source smarter than their competitors. Whether this means working out a buying program with the supplier, finding a new and exciting product line or sourcing goods from an off-price trade show (ahem), there are still ways for retailers to make a profit and cater to customer demand.

The potential for profit can be found in doing the legwork. Retail buyers can’t be scared to get their hands dirty.

Anne Howe
BrainTrust

Wow. How many more retailers will meet their eventual demise with this known-to-fail strategy? Market share gains alone do not equate to a healthy retail business. As a shopper, my time is valued and limited, so I really can’t find time to run around chasing after the 14-day programs either.

Racing to the bottom …

Tony Orlando
BrainTrust
I would advise other store owners in my business to ignore the price-matching situation that other supermarkets are doing, as it is a race to the bottom and possibly will lead to the closing of your store. Go ahead call me an old timer, but on one hand we preach differentiation to create business and profits and on the other hand we encourage price matching as a lost opportunity if you don’t do it. You can’t have it both ways, but I speak for my industry as margins are the thinnest they have ever been. I totally understand what is going on in the retail world today and there are tons of options to buy from. I have lost many potential sales from not price-matching on my catering service and bulk meat sales like turkeys and hams for Christmas because I would end up losing money in doing so. I have to sell customers on the differences of what we prepare vs. the lowest price, and generally I can get the sale by doing a… Read more »
Manmit Shrimali
Guest

Absolutely. It works really well, especially when you see the percentage of customers who actually take the pain to compare it. It plays on the same psychology of self-confirmation. But this is where brand loyalty would be a big challenge, as the price is no longer an incentive to retain the customers. As such, retailers should also think about what else they can do on top of the price-war to retain the customers. It could be as simple as simplifying one of the shopping touchpoint.

Dan Frechtling
BrainTrust
Price-matching is a wager that lower margin on a particular item is exceeded by more trips and higher basket size. It used to work. In fact, it was one of the best ways to free up stalled purchase decisions. Four years ago, Forrester estimated only 5-10% of transactions requested a price match. A far greater percentage were attracted to the store by the promise of fair prices, but didn’t actually bargain. Today the match rate is indeed higher, with more retailers advertising it, more online choices, more dynamic pricing, and more smartphones in peoples’ hands. Most would now say price matching has tipped the scales, with losses exceeding gains. The predominant view may be right. Price matching may be a bad bet. Yet price matching still may work. Herein lies the irony: the paradox of choice. Few shoppers relish negotiating. Too many options for price-matching overwhelm them. These shoppers don’t really enjoy the race to the bottom. They just want to buy their gift and feel like they got a fair price. Price-matching policies free… Read more »
Naomi Shapiro
Guest
2 years 9 months ago

I am surprised that retailers (except declared “every day low pricers”) continue to fall for the price-match offerings. It is a way to get people into your store that might not otherwise come, and if your other prices are not price matches and you sell additional products in your store, you may come out ahead. But if it’s price match on every other item, you’re going to lose. Clients such as those we serve (Retail Intelligence) have come to realize that price optimization is the answer. More retailers will adopt this scientific approach when they see its logic and benefits.

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"Wow. How many more retailers will meet their eventual demise with this known-to-fail strategy?"
"Companies that want to make a profit have to source smarter than their competitors."
"Wow. How many more retailers will meet their eventual demise with this known-to-fail strategy?"

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