Should Old Navy and others offer better deals online than in stores?

Discussion
Source: oldnavy.com
Oct 24, 2018
Jasmine Glasheen

Customers still spend the most in physical stores, so why is Old Navy offering lower prices online than in their brick and mortars? In a recent mall visit to Old Navy, retail anthropologist and half of the Kizer & Bender speaking duo, Georganne Bender, found that the retailer was selling the full-price pajamas that she was about to buy in-store for 35 percent off online.

“Old Navy has a Buy Online Pickup In-Store (BOPIS) program,” Ms. Bender wrote on Kizer & Bender’s Facebook page. “So technically we could have stood at the checkout, ordered pajamas online and stood there while an associate pulled them and brought them to the counter.”

In Ms. Bender’s case, the store associate allowed her to purchase the pajamas at the discounted price without all of the BOPIS rigmarole, but Old Navy isn’t the only retail store where smartphone-savvy customers quickly realize they’re paying more for the in-store experience.

When shopping for her daughter’s Halloween costume, Forbes writer, Dina Gerdeman, found that the price offered online was $10 cheaper than the in-store cost:

“I asked the cashier if she would honor the online price in-store; she politely declined, saying the store didn’t match discounts found on its website. But she did offer to let me order the costume on the store’s computer and get free shipping.”

Although it may seem counterintuitive for physical stores to direct customer traffic online, retailers do pay a lot of extra overhead on their physical stores — from rent costs, to associate salaries, to the price of keeping the heat on. So, it’s easy to see why Old Navy charged more for products sold in-store. It’s also important to note that Old Navy was willing to match its online prices when the difference was brought to an associate’s attention, while many other retailers such as Bloomingdales, Home Depot, and Macy’s have firm policies against matching online prices in physical stores.

When a retailer prices their products differently online than in-store, it forces customers to view that brand’s digital and physical experience as two separate entities, undermining the omnichannel shopping experience that modern consumers have come to expect.

The latest shopper behavioral data still points to the fact that omnichannel shoppers offer up the highest value proposition. A recent study published in Racked found that online shoppers spend 64 percent more when they have first visited a physical store location. “So rather than pitting online shopping against in-person shopping,” Racked says, “the researchers suggest that brick-and-mortar stores make use of digital technology to enhance the customer experience.”

Yet, what’s going to bring customers into a store like Old Navy in the first place, when they know they can get a better deal (with none of the hassle) online? 

DISCUSSION QUESTIONS: Is it important for retailers to offer customers a consistent pricing across online and offline channels? Do pricing disparities like Old Navy’s discourage customers from visiting physical stores?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"The price ought to be the price. Consumers are too smart not to catch channel-specific pricing. And if that's not true today it will be true tomorrow."
"The more price is at the center point of a retailer’s omnichannel (I hate even having to still use that term in 2018) selling strategy the more doomed they are."
"This policy risks alienating some consumers and encourages showrooming which means less in-store revenue."

Join the Discussion!

15 Comments on "Should Old Navy and others offer better deals online than in stores?"


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Neil Saunders
BrainTrust

This has never made sense to me. First, in an omnichannel world where people can easily check prices across platforms, differentiated pricing is frustrating. Second, it costs more to fulfill online orders, so it’s illogical that prices are cheaper. Third, it is insulting to any customer who has made the effort to come into a physical store. It’s a big no-no in my view!

Georganne Bender
BrainTrust

I feel the same way about the coming into the store part. I took the time to visit, and I’ll likely make some impulse purchases while I am there. I don’t do that online.

Ricardo Belmar
BrainTrust

Add to this the fact many retailers will honor the price of a competitor before they honor the lower price of their own website! What craziness is that?

Georganne Bender
BrainTrust
My Millennial daughter actually handled our Old Navy experience with aplomb. Referring to her phone and the pile of pajamas in front of her, she offered to make the purchase online and save the associate time pulling the goods; she could just slide the garments on the counter into a BOPIS bag and we’d be good to go. A store manager who obviously hears this a lot intervened. Look, I get it but consumers are on to the retailer game of ever-changing sales that spin faster than the tea cups at Disneyland. They’re smart shoppers. And we trained them to be that way. One of the many Facebook comments came from a former Gap manager who is now a successful indie retailer with a beautiful — and profitable — brick-and-mortar store: “The retail environment has gotten so ‘on sale’ driven with coupons and deals and online sales that it is getting exhausting to be a consumer. And as a consumer, we don’t think about the fact that even though we may be saving a few… Read more »
Rich Kizer
BrainTrust

I think that at times, people running companies and divisions create the environment of: “what we have here is a failure to communicate.” If I were running a company with that level of forethought and communication, I would be looking for some heads.

Georganne Bender
BrainTrust

Spoken like a true retailer!

Ryan Mathews
BrainTrust

The price ought to be the price. Consumers are too smart not to catch channel-specific pricing. And if that’s not true today it will be true tomorrow. You can prattle on all you want about different overhead models, supply chains, etc. What shoppers will hear is, “We tried to fool you and you caught us.” And yes, 35 percent discounts will “train” customers to — at the very least — check online prices before they go to a physical store.

Camille P. Schuster, PhD.
BrainTrust

Retailers used to be afraid of showrooming. Not any more with this pricing strategy that encourages showrooming. If consumers go to the store to check out products, stand in the store and order online from their phone, that saves no money for the retailer and runs the risk of upsetting consumers who do not go on their phones and pay a higher price in the store. This policy risks alienating some consumers and encourages showrooming which means less in-store revenue.

Jeff Sward
BrainTrust

We know that price incentivizes behavior. Lots of retailers have spent many years embedding this thinking into our heads. So lower online pricing will pretty quickly teach shoppers to NOT visit the store. Or make a return and buy online. And the trip to return will not be made by a happy person. I’ve heard this tale a couple times. Disparate pricing is just begging for unhappy customers.

Dave Bruno
BrainTrust

Shoppers don’t think in channels — period. They don’t distinguish between the website and the store — period. Channel-specific pricing is only meaningful to retailers who are overthinking margins at the (ahem) expense of experiences. Stop the madness. The price is the price.

Doug Garnett
BrainTrust
11 months 29 days ago

Old Navy is piling loss upon loss with this approach. The studies are clear that there is higher profit from sales in store. To reduce prices to drive higher online sales is a big money losing strategy – although it probably suffers a Goodhart’s Law problem by showing nicely in the KPIs while driving corporate losses.

Phil Rubin
BrainTrust
11 months 29 days ago

The more price is at the center point of a retailer’s omnichannel (I hate even having to still use that term in 2018) selling strategy the more doomed they are. If it’s not about a better experience it’s a surefire strategy for margin (and profit) erosion.

Ricardo Belmar
BrainTrust

This just doesn’t make sense, but it isn’t the first time I’ve heard this. Others have told me similar stories at Walmart, where they, in fact, ordered the product online while standing in front of the shelf where the merchandise was and watched an associate come to the shelf and pick the item for BOPIS pickup. Then they had to wait until they got the notification that the product was ready for pickup — all while they were in the store already! Just crazy!

I challenge the cost structure here in terms of shipping costs. With Walmart offering lower prices for in-store pickup vs ship direct to home, we’re seeing evidence that the real-world cost is higher to ship a single item direct to a customer compared to it being shipped in a palette to the store along with other items– at least on a per-item basis. So the justification for this at Old Navy seems dubious and certainly, customers will not recognize any distinction here, as they don’t understand channels — they just shop!

Jasmine Glasheen
BrainTrust

My line of thinking is that since omnichannel shoppers spend the most in-store, the goal should always be to enrich the in-Store experience to boost traffic. Customers have enough reasons to shop online… let’s not give them another one. Can’t wait to talk about this in more detail with Georganne on Braintrust Live this Friday!

Meaghan Brophy
BrainTrust
Meaghan Brophy
Senior Retail Writer
11 months 29 days ago

As a consumer, why would I get in my car, drive to the store, and potentially pay for parking, just to pay more for a product that I could have purchased online for a lower price and free shipping? Unless a brand’s end goal is to eliminate their brick and mortar storefronts, pricing needs to be consistent across channels. At the very least, offer matching.

wpDiscuz
Braintrust
"The price ought to be the price. Consumers are too smart not to catch channel-specific pricing. And if that's not true today it will be true tomorrow."
"The more price is at the center point of a retailer’s omnichannel (I hate even having to still use that term in 2018) selling strategy the more doomed they are."
"This policy risks alienating some consumers and encourages showrooming which means less in-store revenue."

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