Can Price Matching Help Your Small Business Compete?
Price matching at retail isn’t what it used to be. Gone are the days when consumers scoured newspaper ads for the latest deals. Today, shoppers are comparing prices on their smartphones while browsing stores — and may even bring their devices directly to the customer-service desk to negotiate a deal.
Big-box retailers like Best Buy and Target are often able to offset any losses from price matching by selling in volume. This also helps them compete with e-commerce giants like Amazon, which keep prices low by maintaining lower overhead than bricks-and-mortar stores. But price matching can be tough for smaller merchants.
What’s a mom-and-pop shop to do? If you’re thinking about matching your competitors’ low prices, here are a few things to consider.
- Price matching is here to stay. Thanks to smartphones, customers can check prices from the aisles of your store (and every other store in town). Amazon even provides an app to make this easier. If your small business sells the same products as other merchants, ask yourself why customers would buy that product from you when they can purchase it online or at another store for less. Can you differentiate your brand or offering in some way?
- Price matching may not be as expensive as you think. If every customer “showroomed,” stores would lose money, but that simply isn’t the case. Only 6 percent of shoppers with smartphones will flee the store to buy elsewhere, according to a recent report. In fact, many customers may check the product out in your store and buy it from your website, making it more important than ever to offer online purchasing options.
- Price matching is a marketing gimmick. Wal-Mart, Target, and other retailers offer price matching to show how much they care about their customers. (Enough to save their loyal shoppers as much money as possible, anyway.) Experts suggest that although price matching can stop competitors from stealing a given store’s business, it also prompts that store to raise prices on other products to cover losses.
- Price matching applies to non-specialty items. One way to avoid price-matching pressure is to offer exclusive goods. A gift store that specializes in, say, crafts or spices that consumers can’t find anywhere else in town will be immune to price matching. However, if your small business sells items available elsewhere, customers are more apt to choose a lower-priced competitor.
- Price matching isn’t the only way to compete. Keep in mind that shoppers who expect you to match competitors’ prices are probably taking your prices to competitors, too. By offering a level of service that people can’t get from other retailers, you can attract customers and foster loyalty.