Toys R Us, Walmart, Best Buy, and other stores have recently announced their latest guarantees to match prices offered by competing retailers this holiday season. These guarantees sound terrific for consumers, and at first glance, it would seem like price matching is a smart response to the showrooming trend, in which shoppers scope out merchandise in person in stores before purchasing online for less money. But these guarantees come with plenty of fine print, and the result is that price matching doesn’t work in the way shoppers might expect.
Today’s shoppers compare prices across a broad array of outlets—major brick-and-mortar retailers, online giants like Amazon, and all manner of smaller stores and websites. A true price-matching guarantee from a retailer would match pretty much any price a shopper can find for an identical item.
That’s not how these guarantees work, however. Here’s one section in the FAQ for Best Buy’s price-matching guarantee, which reveals that the retailer doesn’t have to match many kinds of prices readily available to consumers:
Does Best Buy match the prices of Internet retailers?
No. Best Buy does not match the prices of Internet-only retailers or the website prices of our local retail competitors’ stores.
Likewise, “Internet pricing” is one of the categories spelled out by Walmart for prices it does not honor. Same thing for Toys R Us, though it does say it’ll match online prices “from selected national competitors” for some baby merchandise.
The truth is that these policies aren’t really price-matching guarantees, but “ad-matching” guarantees instead. (That’s what Walmart calls them, appropriately so.) Retailers will generally match prices only if the shopper presents a valid print advertisement from a competing store, with the exact item and a lower price clearly presented. [UPDATE: Walmart keeps a list of current ads at cash registers, so shoppers don't have to present them in hand in order to get prices matched -- but the special prices have to be list in print somewhere.]
What these stipulations mean to consumers is that, in nearly all cases, retailers will not match the prices from websites, including those of the largest e-retailer of all, Amazon. This is annoying for shoppers. And it would seem to be unwise for retailers: Why, after all, wouldn’t they be willing to match Amazon’s prices, thereby battling back against showrooming and negating the main reason consumers turn to Amazon in the first place? As electronics purchases increasingly shift online, it would seem especially necessary for Best Buy to do all it can to compete with Amazon.
Retail experts say that it’s problematic for brick-and-mortar operations to try to match prices with Amazon, however. “Companies know that retailers advertising in newspaper circulars have restrictions around them—expiration dates, guarantees of product availability, or limitations explicitly around it,” says Sucharita Mulpuru, a Forrester Research analyst. On the other hand, “the web is a dynamic pricing engine, especially Amazon, so to match the price of an item during one hour yesterday isn’t the same as matching Walmart’s circular for a price they’re committed to for this week.”
Shoppers may wish that the lowest price period they can find will be matched, but the Web represents “the Wild West in pricing,” as Mulpuru puts it. “Retailers are protecting themselves, rightfully so, by excluding this type of price matching,” she says, and stores “are just a little nervous that they may be giving their shirts away if they don’t put that restriction out there first.”
Whether a retailer guarantees to match prices or not, there is good reason for shoppers to mention to sales staff that they’ve found the item they want for less money elsewhere. “In most cases, what we’re seeing is that retailers are empowering employees to match prices, or at least knock a few percentage points off of prices, because you don’t want that shopper leaving the store emptyhanded,” says Alison Paul, vice chairman and U.S. Retail & Distribution leader of Deloitte. By being negotiable, rather than “becoming a lawyer in the middle of a transaction,” says Paul, the retailer “buys a lot of goodwill with customers. These are people who are far more likely to talk about their experience. It’s great marketing for the store.”
It’s also a way for the business to see its profit margins shrink. Thom Blischok, chief retail strategist at Booz & Co., says that while it’s necessary for retailers to have competitive prices, it’s not necessarily essential to have the rock-bottom lowest price. “We’ve taught people for years that deals are the way to shop,” says Blischok. While deals sometimes come in the form of cheap prices, they can also take shape via bundled packages, service extras, unexpected perks, or just plain trustworthy advice and guidance from sales staffers. “The job of the retailer is to convince the shopper he’s getting a great value, not just a great price.”
Just how many shoppers engage in price-matching anyway? It’s hard to say, but it’s certainly only a small portion of consumers. “From my experience in retail, you’d easily see 5-10% of transactions during the holiday ask for some price match,” says Mulpuru, “and that’s just people trolling Sunday circulars and looking for better deals.”
“Price-matching is believed to bring people in,” says Blischok. “But it’s just one tactic in the retailer’s arsenal to drive traffic into the store.”