The Price is Right?
When Target recently announced its new online price matching policy, I’m sure I wasn’t the only retail analyst whose first thought was: “This could be a pretty big deal.” While a number of retailers (including Target itself) have experimented with similar price-matching or pricing guarantee programs in the past, this new policy takes things to a new level.
The approach announced this month pulls in multiple online retailers as well as the printed ads of local merchants for a year-round price-match guarantee. Shoppers can receive reimbursement for the difference for lower prices appearing up to one week after they purchase an item at Target stores.
So what does this mean, and how significant is this announcement? Judging by the abundant media cover this story received, the buzz was very real. I can’t help but wonder, however, how effective or impactful this policy will really be. A closer look at the fine print makes me think that it might not be the game-changer some are expecting.
The first big issue is that the new policy only covers “qualifying items”; a visit to Target’s website reveals a fairly long list of exclusions and exceptions, both in terms of the products that are eligible for the program, and the mechanics of how the guarantee actually works. Additionally, while this is being talked about as a comprehensive online price-match program, the reality is that it applies specifically to a few select online retailers: Target.com, Amazon.com, Walmart.com, Bestbuy.com or Toysrus.com. Now, granted, those are some big names, and those sites represent a pretty sizable chunk of virtual real estate, but it’s still a relatively short list.
It’s tough for me to see a way that the disparity between a program billed as comprehensive online price-matching and a reality where there are some fairly strict limitations isn’t going to lead to some confusion and frustration on the part of the shopping public at some point. The mix between printed circulars and online sites also leads me to wonder how realistic it is that shoppers will take the time to do extensive browsing to ensure that they got the lowest possible price. Time is also a commodity, as is convenience, and, for many, a large part of the appeal of shopping online is the ability to save time and avoid having to physically drive to a store. If utilizing this program means taking part in extensive online searches and driving to your local Target, I wonder how popular or prevalent it will become.
That said, from Target’s perspective, this may be a moot point. For them, the value might be less about the mechanics of the program and more about the optics. In that context, it seems clear to me that this is already a success. Not only did Target generate a couple of days’ worth of extensive (and free) media coverage, that coverage was universally positive and continued to associate the Target name with “lowest prices” and “best bargains.”
In some respects, you might also argue that this is less about how effective this price match program will be and more about how it makes us, as consumers, feel about shopping at Target. Whether or not it is realistic to think that shoppers will regularly take advantage of the program, it allows people to believe they are doing their due diligence, and potentially makes people feel price-conscious when they shop at Target.
Regardless, there is enormous value in being the first to implement such a broad program. Target is big name, and when such a prominent national brand takes such a step, there is always the possibility (or probability) that others will follow suit. This is far from the last we have heard of these types of programs.
Is this just the latest shot fired in what is going to be a long battle: the back and forth between brick-and-mortar and online retail? Or, on the other hand, is it the beginning of a new approach? Rather than fighting, retailers are using new tools to blur the lines between going online and going to the store. Will it work? Stay tuned! We’d love to hear your thoughts through a comment below or you can contact me directly at email@example.com.
Click here for past columns by Jeff Green.