On January 9, Target Corporation (NYSE: TGT) rewarded shoppers with a new permanent price matching policy. This continues the 2012 Holiday price match campaign that clearly delivered to the retailer’s great expectations of keeping customers in the store vs. exiting to shop online.
As pricing/value drives Target’s brand message, there’s no reason not to expect otherwise than permanence in their new policy. The question at the back of my mind was Why? What happens if Target promises and then retracts? Will its core brand be damaged? It’s a risk question of quality and numbers.
In the new normal of everyday crisis brand management, dys-satisfied customers shout, shrug and resume shopping. Changing big, entrenched behaviors (like loyalty) aren’t worth the trouble. Remember threats to leave Facebook, Instagram, Pinterest when policies changed abruptly? Hot-flash irritability gives way to inertia when it comes to promises not kept or unsweetened and untested policy changes. (More about behavior below.)
However the price-match wars play out, Target customers will continue to shop there. The dinosaur minority (i.e., those who read a circular then come in to shop and buy) may change through word of mouth. The growing tech-smart base will no longer stray because the price will always be right, guaranteed says Target. Target shoppers are loyal to price and to themselves first, even though they have strong brand awareness of Target as a value driver. Not a Target customer myself, this is what I hear through the consumer grapevine.
It all makes sense. Most know the expression “Does Macy’s [34th St] tell Gimbels [32rd St]”. (Some understand it from childhood experience!) Back in the days, Gimbels took on Macy’s in every way, up to opening New York’s first bargain basement in a department store according to David K. Randall. In “Only the Store Is Gone,” (The New York Times, 2/19/2006) Randall describes the intense retail rivalry. Gimbels closed in 1987 and by 2006, ground broke on luxury apartments on the venerable retail ground.
Is retail deja vu unfolding?
Flat out, Target tells Amazon.com, (NYSE:AMZN) Best Buy(NYSE:BBY) (and all the other discounters) that they plan to own their price-minded, tech savvy customers whatever it takes. And there’s the great Amen. For Target and its customers, it’s win-win. Target has taken actions that are brand-savvy. The price matching policy responds to existing customer behaviors: shopping for best prices. Now, Target-happy customers will head for the checkout, not the exit.
When in doubt, tweak
Tweaking technology to match prices is easy and cost-efficient. Compared to re-pricing and relabeling merchandise, it’s hardly a cost at all. It’s a defensive move that shifts that operational task to your competitors. But now, poised to react to any price, Target is really responding to customer needs and existing behaviors. Now, they’ve taken online price shopping and made it part of the Target customer experience.
In fact, this new price matching is more efficient than rebranding along some price point and suffering the consequences. Think JC Penney and their lingering fiasco. Their new brand angel promising no coupons didn’t succeed because it sought to change a behavior that customers actually like – the thrill of getting a good deal.