PLANNING AND LEADERSHIP FOR A BETTER WORLD
PLANNING AND LEADERSHIP FOR A BETTER WORLD Price comparison apps and sites accessible via mobile devices have posed a challenge to brick and mortar stores for the last few years. Using these apps, customers would come into a store, browse, and then quickly search for a better price at local stores or online retailers.
The practice was dubbed “showrooming” because the customer would come into a store to look at the merchandise, while buying it at a lower price elsewhere.
Screen shot of Price Check by Amazon
This last holiday season, retailers felt Amazon escalated the battle to new levels with its Price Check by Amazon app. By taking a photo of a product, scanning the product’s bar code, or typing the name of the product into the smartphone, the app would search Amazon and its affiliate merchant sites for the product. If available at a lower price, the customer could buy the product online with one click.
As you can imagine, retailers small and large felt used. Well, the impact of these comparison apps has driven Target, one of the largest retailers in the country, to fight back.
A recent Wall Street Journal article discussed an effort by Target to negate the benefit of these apps. According to the Journal, Target wrote letters to its suppliers asking for unique versions of products that would only be available through the retailer's stores. These products would not be made available to Target’s online rivals.
This request, in and of itself, is not that unusual. Target, like other large retailers, has worked with suppliers over the years to offer exclusive products. For example, it is quite common for a retail chain to team up with a celebrity to offer a line of discount clothing, home furnishings, or kitchenware. The request in Target’s letter simply asked for more of these types of products.
Industry experts believe other retailers will probably take a similar approach with their suppliers. However, these tactics may not help in the long run. The reason: they do not address the fundamental problem. Namely, online-only retailers have an advantage in that their labor costs are lower and they currently do not collect sales tax in many states.
And so the battle begins.
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