Target Tries to Fight Against Amazon Price Matching, "Showrooming"

By Wesley Fenlon

Price matching: ultimate shopping tool or evil retail-killing invention? Shocker: Target believes the latter.

When Amazon released augmented reality shopping app Flow and Price Check for iPhone, the company turned department stores into their very own showrooms. Amazon's apps encouraged shoppers to get a feel for products in person and then buy them at lower prices online. Amazon saves money by operating out of a warehouse and consumers save money by buying on the web. Retailers get screwed.

Target is fighting back, or at least trying to. "Begging for help" might be a better description. The retailer, which operates more than 1700 stores in the United States, sent out a letter to vendors asking them for exclusive products that would keep shoppers spending money at brick-and-mortar locations.

Small business owners thought Amazon crossed an ethical line when it offered a 5% discount to shoppers just for using the Price Match app at a physical store.

Target's letter to vendors suggested several strategies that could help the retailer stay relevant in a world where online sales are omnipresent and comparison shopping is ludicrously easy for anyone with a smartphone. They ask for exclusive products first and compromises on general pricing second, which would help Target match the pricing of competitors. That's pretty much asking for a discount, which puts product vendors in an awkward position.

For them, online sales are great. They sell products to sites like Amazon and make an easy buck. But Target and retailers like it are still important: they can't abandon those relationships. A shrug and a "not our problem" might be their easiest out.

Small business and bookstore owners thought Amazon crossed an ethical line when it offered a 5% discount to shoppers for using the Price Match app at a physical store. Amazon was, at least passively, encouraging shoppers to take advantage of those retailers without contributing to their continued operation. Amazon's supporters may argue that there's little distinction between price matching and window shopping.

Target doesn't stand to lose as much from price matching as small businesses--it has the corporate power to influence the market to a much greater extent. Brick-and-mortar shopping numbers were even up over the 2011 holiday season to the tune of about four percent. Online shopping saw a more significant 15 percent jump.

Even if that had more to do with an entire month of specialized deals than a price matching app, expect more stores to adopt membership programs and exclusive items as the threat of online bargains and free shipping carve out a meatier chunk of consumer spending.