Price matching is the newest trend for attracting customers to shop at the big box chains, especially during the holidays. Best Buy and Target are matching online competitors, like Amazon, when it makes sense. Price matching may be turning more gazers into buyers by allowing them to get better deals in stores. But price matching may or may not work for you.
What’s It All About?
Businesses are fighting a shopping pattern called “showrooming.” This is where shoppers check out your store only to go online and buy the merchandise at a cheaper rate. Best Buy estimates about 15% of its shoppers partake in showrooming. The shoppers come in and look around at your displays. They then either go back home and find it online, or use an application on their phone to track down a cheaper price in another place. Either way you lose out, and the sale isn’t made in your store. So what can you do to up the ante? One thing the big box stores are doing is allowing their employees to match prices with manager approval if it means a sale as opposed to no sale. The key is to have the customer prove to you or your employee that the price is cheaper where he or she is looking online. If you can match the price, then you most likely will have the sale.
How Can Price Matching Backfire?
Retail experts are saying that this line of thought could backfire on you. Shoppers asking for price cuts and taking up time to prove they exists can anger other customers waiting in line. Arguing about matching prices and using phone applications to prove the point won't get the next customer through the line. Also, with the way that prices fluctuate on the internet, it may be difficult to keep up with the constant changes. Additionally, buying customers will be more willing to check online prices against the prices that you have if they are encouraged to do so. Plus, with sales tax and shipping, you won’t always come out ahead. More importantly, customers who buy at a higher price are going to be unhappy to find more-active shoppers got discounts they did not.
Online stores get better shipping rates too, so they can appear to not charge for shipping, something you may not be able to match. Price matching may also dent profits by attracting too many shoppers looking for a match at lower prices. A profit margin can be wiped out by aggressive price matching where your store buys the merchandise at wholesale, but then when another store’s price is matched, profits are lost, especially if your store offers better in-person service (which costs you money). Some shoppers also may find it easier just to click on an item online than go through all the hassle of shopping in your store.
Winding It Up
With the competitive pricing this year and your customers looking for a bargain, which is the best route for you to go? Matching prices will make you sales, but it may cut heavily into your profits. Not matching prices may drive business away from your store and into your competitors’ waiting arms. The best thing to do is take stock of your inventory, put on sale what you can afford to match prices on, and then run your regular sales. It may make you money.
Photo courtesy of www.freedigitalphotos.net
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