Good Question: Does Price Matching Really Save Us Money?
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MINNEAPOLIS (WCCO) — Second to the cart, the smartphone might be the most common shopping accessory.
Comparison shopping in-store is perceived to be hurting retailers like Target and Best Buy. That’s why on Tuesday, Target announced it would match any online price from Amazon.com, BestBuy.com, ToysRUs.com, and Walmart.com for up to seven days after the purchase.
But how often do people really use price matching?
“We saw across the country, guests were using the holiday price match,” said Jenna Reck, a Target spokesperson.
Of course, the problem for Target is that while it wants to get the price match message out, the retailer doesn’t want the program to become a drain on the business.
“It is a little bit of a hassle to get that price match,” said Sean Naughton, an analyst with Piper Jaffrey who covers Target Corp.
“On the most recent conference call CEO Gregg Steinhafel said it was a single digit percentage that would get that price match,” Naughton said.
Consumers go to the guest service desk to get the match; they can’t just go to the checkout line. It’s not a huge burden, but it’s something that might make you think before going to get a 50 cent match.
“It depends on the guest and the item,” Reck said.
The reality is that price match offers have often been more about marketing than about saving actual money.
More than a third of Target’s revenue comes from apparel and clothing, according to Naughton.
“These are products that are exclusive to Target,” he said. “They’re not going to match those at Amazon.”
However, there is money to be saved by doing price matches with electronics, music, books, and toys.
“And those are categories that Target does have a little difficulty with,” Naughton said.
He added: “The thought process, I believe, is to gain additional share of wallet.”
By offering a 5 percent discount to Target RED Card users as well as price matching, Target is able to capture more of the individual consumer’s spending. Because the company is so big, just getting a little more from every regular consumer could pay big dividends.
For many consumers, just the message that Target isn’t afraid to match the prices of its larger online competitors is key.
“I really think it’s about the confidence,” said Reck, the Target spokesperson. “If you’re buying a big ticket item or small ticket item, you know you’re gonna get the best value in retail when you shop at Target.”
The analyst agreed.
“More than anything else, it gives them increased confidence that they’re getting the best deal,” Naughton said.