Circuit City Identical Online/Offline Pricing Plan Might Actually Work

Written by Evan Schuman
October 15th, 2008

Circuit City pledged on Wednesday (Oct. 15) that it would have the same price for all products, regardless of whether they were being offered online or in-store. Historically, retailers have often had lower pricing online because the online costs are lower and, to a lesser extent, it would compensate slightly for shipping costs.

The issue is real, in that many consumers do object to the pricing differences as they see it being a scam. Circuit City Marketing VP Jeff Maynard played that up in a statement he issued: "One Price Promise assures Circuit City shoppers that they will be treated fairly and equally regardless of how they shop with us."

One other major retailer in Circuit City’s space, Best Buy, learned that such a perception problem could generate all kinds of problems. Last year, the Connecticut Attorney General sued Best Buy because it said those price differences were criminally misleading. That case, which is still active and is now in the middle of the legal discovery phase, involved Best Buy in-store kiosks that showed both in-store prices and online prices in such a way that many consumers thought they were looking at the Web prices when they were actually seeing higher in-store prices.

The Circuit City "one price promise" move could ultimately prove to be quite a clever piece of marketing. First, it will be trumpeted as a consumer advantage, even if it means that the price equality will be achieved by sometimes (all the time?) online pricing being raised to match the in-store price.

Circuit City spokesman Jim Babb said there was no one way that the chain’s pricing would be made identical, adding that sometimes in-store pricing will be dropped to match online and other times, online prices may be increased.

Either way, the price changes will likely be minimal in that in-store and online pricing for any product is rarely significantly higher or lower, given the industry’s pricing competition. Babb didn’t have specifics about his chain’s current pricing differences, but he pointed out that Circuit City’s price-match policy with other retailers would remain, which pretty much eliminates most significant pricing differences anyway.

So if Circuit City can get significant consumer support for a change that wouldn’t cost very much—if anything—it seems like it could deliver some good traction. The question is whether others will follow.

If they do follow, there are some interesting implications. It would mean that a cross-channel retailer would never be able to offer a product online for less than it can afford to offer in-store, unless it raised pricing somewhere else to make up for the loss. Would that give a tactical advantage to pureplay e-tailers who would be under no such restriction?

It would seem unlikely because, to Babb’s point, price-match programs—as well as online price comparison sites and widgets—almost force all retailers to keep pricing within a very tight range.

Maynard’s team certainly believes this plan will work. "We plan to let consumers know about One Price Promise in a big way," he said. "We are launching an aggressive national advertising campaign that includes print, broadcast, Internet and in-store marketing tools, and we believe this message of consistency, simplicity and transparency will resonate strongly with consumers in today’s world."

For the moment, I tend to agree.


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