This week, Three-Minute Thursdays host Lainie Petersen is joined by Terry Clear, 8th & Walton’s Director, Replenishment & Sales Insights, to discuss Target’s decision to stop matching the prices of external competitors.
Lainie: With Target joining Walmart and Amazon in no longer matching external competitor prices, do you foresee any changes in retailer expectations during supplier negotiations, especially related to margins?
Terry: I don’t believe so. Target, in my opinion, is a little late to the game. Walmart and Amazon have already made that decision. Really, that decision is based on a low number of occurrences—not many shoppers were trying to do the price match. Often, that price match attempt at the register was not a positive event for either the customer or the retailer because perhaps the item was not eligible for a price match. So it led to negative feelings and lots of bad things.
Additionally, the price match erodes margins, and because there’s the Internet today and a lot of retailers dynamically change prices, sometimes Amazon will change prices by the hour, how do you price match that when the price is changing all the time? Also, many suppliers don’t sell the same product to each retailer. So, there will be a slight difference in the product you see at Walmart and the product you see at Target. They do that to eliminate or prevent price matching.
Lainie: All right. Do you think that the elimination of this practice of external price matching will create more stability and predictability for suppliers, or will there be some new uncertainties?
Terry: I don’t think this is going to have any effect on suppliers, because this is a retail price match, and it really doesn’t have anything to do with the price that the retailer is paying the supplier.
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