January 08, 2013 at 14:12 PM EST
Target to Offer Price Matching Year Round (TGT)

Discount retailer, Target Corporation (TGT) announced on Tuesday that they will be extending their holiday price match program to a year round basis.

The program, which was originally planned to last only from November 1 to December 16, will now allow customers to have the option of price matching their products throughout the entire year. Included in this program is the ability for Target customers return items to the store if they see a target ad or an ad from selected competitors during the following week at a lower price. Customers will be refunded the difference the product’s price. This program was created after the company reported flat sales in December.

Although Target reported that there was a low volume of customers who participated in the holiday season price match program, Target believes that their year long price matching will help them better compete with competitors including Walmart (WMT), Best Buy (BBY), Amazon (AMZN), and Toys R Us.

Walmart currently accepts price matching for customers from competitors ads, and also price matches 30,000 of their items to ensure that customers are receiving the lowest price.

Amazon does not currently price match, although they do allow customers to be refunded the difference on some products if the Amazon price is lowered at a later date.

Best Buy also matches competitors pricing at local stores. Toys R Us offers price matching in stores and online.

Potential Benefits?

With Target’s announcement, some may take the news as yet another sign of tough economic times. However, this program can potentially be very beneficial to Target.

The majority of consumers may not take the time to research competitors prices on an item. However, as technology grows, more and more consumers are browsing stores like Target to test out an item, and then buying it for a lower price online. At the same time, the growing number of smart phone users is allowing consumers to scan an item’s bar code by using apps like RedLaser and see all the lowest prices of the item that they are scanning.

In addition to a general price checker, Target has added its own app with includes a price scanner. Target’s scanner will compete directly with Amazon’s scanner, which previously created a promotion last year which allowed consumers who were in physical stores to scan an item with the Amazon scanner, and receive a $5 off discount for Amazon just by using it.

It’s difficult to say whether or not this program will be beneficial to TGT. At the very least the company is receiving free press, translating into greater brand awareness (several major news outlets have picked up the story). Although the company reported that the holiday price match program did not have many customers taking advantage of the deal, it is essential for TGT to do whatever they can in order to compete with competitors.

Competition Reaching a Crescendo

Online shopping has created a fierce atmosphere for retailers, forcing companies to constantly offer promotions to get consumers to enter their stores. With price matching, consumers may decide to buy a product at Target if they are able to receive the same price that they can get on Amazon.

But online shopping isn’t Target’s only major threat. Walmart’s low prices and price matching advertising has created tough competition. Both companies market to consumers who are shopping on a budget, and Walmart often is able to offer lower prices than Target.

That is, until Target began price matching year round.

Target shares were down 39 cents, or -0.6%, during Tuesday afternoon trading. The stock has increased 24% in the past year.

Target Corporation(TGT) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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