In a transparent, information-rich world where showrooming is commonplace, a pricing tactic used by many retailers seems strangely shortsighted. For lack of a better term, let’s call this shortsighted pricing practice “Duplicitous Pricing” or DP for short.
Simply put, DP occurs when a retailer posts one price in their store while maintaining a different price somewhere else – like the Internet. Interestingly, the practice of DP didn’t originate with the Web; as it was fairly common for retailers like car dealers, electronics stores and others selling big ticket items to place a discounted price in their newspaper ad (to attract visitors), while maintaining a regular price in their store (to make better margins from the not-so-savvy shoppers). The thought was that only those who asked for the special price would receive it.
Prior to the spread of the information superhighway, practicing DP was quite safe and actually lucrative. It was rare that a customer would discover the lower price after they purchased, since that day’s newspaper ad was likely already in the garbage.
Duplicitous Pricing in the Era of Showrooming
According to Google, 82% of smartphone users turn to their devices to help them make an in-store product decision. When pricing is a part of that product decision, these consumers often are forced by high in-store prices to participate in the growing act of “showrooming.” Showrooming, simply put, is the practice of visiting a physical retailer in order to check out a product prior to buying it online at a lower price (often with free shipping and no sales tax).
What happens when (in their search for product help) these consumers find your online price is well below what you’re advertising in-store? Do they just showroom you? Do they ask for the lower price from your physical location?
Or… do they just trust you less and buy from someone else?
Newsflash: Staples in Failing and Duplicitous Pricing Will Not Help
The question is not “Will Staples fail?” The question is “Will Staplers fail before, after or with Office Max/Depot?”
I happened to be near a Staples location recently and thought I would drop in to pick up a copy of TurboTax. If it wasn’t discounted, my plan was to use my Amazon PriceCheck app and ask Staples to match that price. Of course, if the copy of TurboTax was presented in-store with a decently discounted price, I would just buy a copy there without checking the price app.
Staples, you may not know, has a 110% price match guarantee that explains “If you find a currently available lower price on a new, identical item, show us the lower price when you buy the item at Staples and we will match it plus will discount it by 10% of the difference.”
Sounded great, except I still don’t know what that means, since they weren’t willing to do more than match the Amazon price on this trip.
Of course, that wasn’t the weird part of this attempted purchase.
Staples showed an in-store 15% discount on the TurboTax software I needed. Despite the fact that they claimed this to be a “Hot Deal,” I was sure I’d seen it priced elsewhere for less. Grabbing my iPhone, I quickly opened and navigated the Staples app to the page displaying this exact item.
Staples in-store “Hot Deal” price: $84.99
Staples online “Yawn” price: $64.85
Yes, you’re reading this right, Staples was willing to give me a 35% discount and free shipping online, but only a 15% discount in the store. Moreover, this meant I was now obliged to use Staples’ own online price to force them to honor their 110% price match guarantee. Weird, if you ask me.
Not only weird, but a little slimy.
Duplicitous Pricing and Customer Trust
I understand why Staples tried to pull this fast one on me, but I don’t condone it. It’s already a very painful experience to shop in their stores; and when their own online pricing blows away what you can find in-store, there’s no reason to waste the trip. Plus, I now trust nothing I see in-store there; and I will forever showroom when in Staples.
Does DP describe your pricing strategy? If so, be prepared to observe a significant growth in showrooming with your customer base. Your customers will allow you to make profit; though they draw the line at being played for fools.
I’ve always liked the saying “pigs get fed and hogs get slaughtered.” In retail, this means it’s okay to be a little bit of a pig, but be prepared to lose my business if you become hog-like. Duplicitous pricing is the epitome of hog-like behavior. It’s short-term thinking that ensures you have fewer pesky customers in the future.
Not a good strategy if you ask me.