Retail Challenges with Price Match Guarantees
Price Match Guarantee: A common online and storefront policy is to match any advertised price by a competitor as long as it is offered on the same item and within the same market. It offers customers peace of mind that your store will not gouge them and may keep customers loyal. It relies on customers to be too lazy to research other prices while giving your store a “price halo.” But of course, there is the danger that customers will find lower prices. In fact, this policy invites them to look for better prices elsewhere. And the interaction with a customer to reduce the price at the register or refund a recent full purchase price takes time for both your store associate and your customer.
These can be touchy negotiations, especially if your store associate is not gracious and the customer misinterprets the offer or the competition’s price. It is common for customers to bring in a “like” item price – but not the same item – then demand that you reduce your price to match it. So from a high-level this seems like a smart offering, but in the reality of daily operations; it can be a costly policy to uphold.
110% Price Match Guarantee: A variation of the price match guarantee is beating your competition by 10% should your customer find a lower price offered elsewhere. Again, the same benefits and dangers apply as with the former price match guarantee. But customers will be enticed to shop solely on price even more. This is not the behavior of a particularly loyal group!
Giving an extra 10% on an item is no more work on your store associate’s behalf (changing the sales transaction price) and probably goes much further to communicating to your customers that you will take care of them no matter what the competition does. So in many ways, if you are planning on meeting competitive prices, going with an additional 10% probably doesn’t tremendously change the outcome. You will still have customers who take advantage of this policy but your low price positioning cannot be questioned.
Another option is to promote the 110% price match policy only during a high demand period, such as back to school. Offer this policy for a limited time during a highly promotional season to restrain your regular customers from being enticed by competitors who will increase their promotional pricing during the “high season.”