Retailers attempt to out-discount each other

The Associated Press

NEW YORK — Forget style, quality and customer service. This holiday season, all that matters is price.

A week before Halloween and two full months before Christmas, stores are desperately trying to outdo each other in hopes of drawing in customers worn down by the economy.

Wal-Mart, the biggest store in the nation, joined the price wars Monday by announcing that it would give gift cards to shoppers if they buy something there and find it somewhere else cheaper.

Staples and Bed Bath & Beyond have already said they will match the lowest prices of and other big Internet retailers. Sears is going a step further, offering to beat a competitor’s best price by 10 percent.

Almost four years after the onset of the Great Recession, customers have learned to expect a deal. In better times, retailers could afford to keep prices higher and use promises of higher quality and better service to lure people into stores.

Those days are over. In a recent poll of 1,000 shoppers by America’s Research Group, 78 percent said they were more driven by sales than they were a year ago. During the financial meltdown in 2008, that figure was only 68 percent.

Wal-Mart last year went back to its “everyday low prices” roots, a bedrock philosophy of founder Sam Walton, rather than slashing prices only on certain items to draw in customers. Now everyday low prices might not be low enough. So it’s trying something it is calling the Christmas Price Guarantee: if you buy something at Wal-Mart from Nov. 1 to Dec. 25 and find the identical product elsewhere for less, you get a gift card in the amount of the difference.

The deal excludes online prices and some categories of merchandise.

But it is good even if weeks pass between your purchase and spotting the better deal. And it applies even to big items like TVs, for which prices can drop steeply as Christmas approaches.

Duncan MacNaughton, chief merchandising officer for Wal-Mart’s U.S. stores, told reporters Monday that he has noticed “much more promotional intensity and gimmicks”
among competitors.

“This gives customers peace of mind that we are an advocate for them,” he said.

Retailers are responding to a customer base that is better informed and more comfortable shopping online than ever. In a survey of roughly 1,000 customers by Citi Investment Research & Analysis, shoppers also indicated it would take deeper discounts to get them to buy. Two-thirds said it would take 30 to 50 percent off to entice them to buy, compared with a little more than half last year.

Jenna Wahl, a cardiac nurse from Bloomington, Ind., said she expects to spend about as much on holiday gifts this year as last — roughly $500 — but will try to get more for her money.

She’ll be asking stores to do more price-matching and plans to use her iPhone to check prices and coupons.

The holiday price wars mark an acceleration of a trend that has already swept the retail industry. Lowe’s, the nation’s No. 2 home improvement store, said in August it was starting to focus on everyday low prices for items that customers can easily comparison-shop at rivals such as Home Depot and Sears.

Amazon, which typically beats its competitors on prices does not appear to be backing down either.

“We will have our hands on every Black Friday circular we can find so that we can meet or beat advertised deals on the products we carry,” said Sally Fouts, an
Amazon spokeswoman.