Selling Your Soul…One Price Match At A Time
By Doug Stephens
Barely a day goes by without at least a story or two about how online retailers are eating their brick and mortar counterpart’s lunches. Showrooming consumers are giving retailers fits. Physical retail stores are playing host to an increasing contingent of shoppers who are using their stores as touchy-feely galleries only to buy (sometimes then and there) from online competitors. And while only a small percentage of consumers are what can be considered true showroomers – those who actually buy from an online competitor while in a retailers physical store, the digital writing is on the wall – as smartphone penetration and use increases, retailers can only expect more showrooming and more lost sales.
Retailers have responded with a variety of counter-measures, from exclusive products like those that Target has had success with to bundled (buy this/get this) sorts of value to other things like layaway plans or free product installation. Some, like Best Buy, have defaulted to the dark-art of price matching – meeting any price on comparable items that a customer can produce evidence of. One Best Buy executive, Michael Vitelli, was recently quoted as saying,
“Our Blue Shirts are very positive about this and very empowered by giving them the ability to match prices,” said Vitelli. “We’re moving into the fourth competitive quarter with that empowerment, engagement and ability for our Blue Shirts to make the decision in the moment to take care of our customers.”
If Mr. Vitelli actually believes this, I worry because there are two really dangerous implications to thinking this way. First, that Best Buy regards having to price-match their competitors as a “positive.” Second that staff find having to price match “empowering”.
Let’s be honest, price matching is never positive – for anyone – even consumers. Everyone loses. In one swift and repeated action you tell consumers that you’re not only over-priced and that your competitors price was more fair but also that you have no means of justifying the premium you’re charging and can do little more than capitulate when customers catch you. Customers lose because they’ve had to grovel for a price reduction and while I know some shoppers revel in the victory making a retailer cough up a discount represents, most of us just hate it. And we walk away believing that if you were over-priced on what we needed this time, chances are you’re over –priced on everything and we simply don’t return.
And it’s misguided to assume sales associates feel somehow “empowered” by all this. Believe me, for staff, there’s nothing less empowering than having a customer waive a competitor’s flyer in their face and demand a price match. It’s a soul-sucking ordeal and one that bit by bit, day by day, price cut by price cut impresses on them that they’re working in the wrong place. Sure, you’ve alleviated the pressure they can be put under but you’re actually empowering them to publicly demonstrate your company’s weakness on value…every day! That’s not empowerment, it’s brand suicide.
The truth is, if you’re in a position where you’re only option is to match prices you’re either selling the wrong products or you haven’t reimagined your total brand value proposition to the extent that you’re worth the difference in price. That’s the real problem. I’ve said for years that Best Buy needs to completely rethink what it does. The world does need an electronics store but not the kind Best Buy runs right now. They operate pre-Internet stores in a post-internet world. Price matching will only put Band-Aids over the severed arteries that their stores have become.
To be fair though, Best Buy is hardly alone in adopting the pseudo-strategy of price matching. They’re only one of the more large and visible victims of showrooming.
Some will read this and say “But retailers have to do what the have to do. This is about survival!” I understand all that. But its critical that companies not characterize price matching as something it’s not. It’s not a strategy. It’s merely a short-term measure– and very often a tombstone epitaph.
Look for my book, The Retail Revival. in stores February 2013.