Wal-Mart's "Best Price Guarantee" Reflects Multi-Channel Discomfort
Shortly before Black Friday, the world's largest retailer made a bold claim. Wal-Mart issued a statement that this holiday season it would offer "the Industry's best price-match guarantee" and "the strongest price-match guarantee in the market." Although we grant you that "best" is a highly subjective term (both in terms of "best in what way?" and "best for whom?"), the program would presumably offer much more generous terms on a virtually unlimited array of products. Sort of a Costco/Nordstrom returns policy approach to price-matching, right? Not quite.
Even though many chains for years have price-matched any legitimate rival offer—including, of course, online deals from their own chains—Wal-Mart's new program excludes all online offerings, even those from walmart.com. How is that the industry's best price-match program? More importantly, though, let's explore what this online-exclusion means.
On the one hand, the idea of banning Web price comparisons has been around for years. It's based on the assumption that different cost structures make in-store pricing not comparable to online pricing. Although that's certainly true, it's also as certainly irrelevant.
On the other hand, consumers today are embracing the idea of merged channels (the third stage, going beyond multi-channel and then beyond cross-channel) in a way that many retailers are still unwilling to do. They're standing in stores, looking at their mobile devices that display Web sites.
Those consumers no longer see a distinction between mobile, Web and in-store. For them, it's simply a matter of buying a laptop or a shirt or a garden hose. That's all they see and, candidly, that's all they should see. Wal-Mart needs to see the world the same way.If customers are standing in a Wal-Mart aisle and their Android mobile devices scan a barcode and say that Amazon has this $89 item for $6 less ("do you want to click and order it now, for delivery tomorrow morning?"), why wouldn't Wal-Mart match that and win the sale—plus the sale of a bunch of other items?
Realistically, what do you think consumers are likely to do if they choose to click "yes" and buy the item from Amazon after being told "no" to a price-match? Walking out of the store is an excellent possibility. For a few bucks, the retailer is alienating customers who are already right in its store, with their payment cards at the ready.
There's another reason why some chains have historically resisted online price-matching. By requiring a "printed ad" from a brick-and-mortar only, the chain is presumably bypassing a ton of mom-and-pops that have much less overhead. Also, the chance of fraud is much higher, given that any good thief can create—and print—a bogus Web page making any kind of price claim.
That admittedly is a more legitimate concern, but it could be addressed through a series of simple restrictions, such as limiting price-matching to the online site of a chain with stores within 20 miles of the Wal-Mart store plus a list of perhaps the top 50 online sites. And a store manager could verify any suspicious claims.
Sure, it's easier to simply ban online price-matching. But is that going to be a viable strategy? Doesn't it also send an implicit message: "We here at Wal-Mart concede that many online deals—for the identical merchandise we sell—are priced so much more attractively that we can't match it"?
Not only is that a horrible message to send, it's rarely even true. With Wal-Mart's massive volume buying power and relentless manufacturer negotiations, its pricing is actually among the cheapest anywhere. And when its pricing isn't as low, it's often so close as not to be worth the aggravation in declining the match.
With Wal-Mart's pricing, why not truly have the best price-match deal? Wal-Mart, don't be afraid of your shadow. It's only walmart.com.