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IRI: is the price guarantee mechanic dead? | Retail Times

Since 1925 John Lewis has promised its customers it would ‘never knowingly be undersold’.

The company’s price guarantee has boosted loyalty and trust in the brand, and the strategy has been copied by the supermarkets. Yet there is growing evidence that brand price matching has fallen out of favour with retailers and shoppers.

For the supermarkets the idea of promising a shopper a refund if they can find a product cheaper elsewhere has been a popular marketing ploy for a number of years.

Asda led the field six years ago as it and its rivals struggled to find a way to improve loyalty among increasingly fickle shoppers without fuelling the price war. The message to consumers was ‘don’t bother shopping around because you’re safe with us’; while the warning to supermarket rivals was it is pointless dropping prices because every single one will be matched.

Yet price guarantees are going out of fashion for a number of reasons.

Sales for all grocers fail to grow if everyone is matching prices, while there is a mounting negative perception of these schemes among shoppers and regulators, such as the Groceries Code Adjudicator (GCA).

There is an opinion that brand price matching keeps prices higher than they need to be because there is a reduced incentive to discount.

These schemes can also be overly complex and costly. Morrisons dropped its price matching against Aldi and Lidl because shoppers found it too complicated and the grocer was accused of not comparing like with like. It also used to price match against Tesco, Asda and Sainsbury’s if you spent at least £15, but it has decided to revamp its ‘More’ scheme instead and is now offering points based on spending.

On April 26 Sainsbury’s abandoned its brand match claiming its customers preferred lower regular prices. Asda is reported to be reviewing its policy, but The Asda Price Guarantee still promises a 10% cheaper shop on a comparable grocery basket. Tesco is still matching against Morrisons, Asda and Sainsbury’s and giving shoppers immediate discounts on branded products at the till.

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IRI: is the price guarantee mechanic dead? – Retail Times.

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