@Skip – good point, there is definitely more to differentiation than just price alone. However, I would argue that with all those points – “better location, different design environment, better online ordering tools, better service, more knowledgeable staff, better trained sales team” – I would put forward that the larger retailers are more capable of offering those aspects due to their resources. Traditionally, all these come at a price and larger retailers tend to price their products higher to recoup the costs. However, if they then employ price matching – they have all the odds stacked in their favour.

Another point is that consumers are becoming increasingly knowledge rich. With the web, they have all the information at their fingertips, and they often do all their research beforehand and know exactly which product they want before they walk in the store. For that subsection of the purchasing community, they tend to be solely focused on price and disregard factors such as staff advice – as long as they can get their product in a quick, efficient and reliable way.

@Reid – yes good point regarding the addons. Another avenue for the big retailers to gouge the consumers and turn a buck.

But I disagree that the low price guarantee will kill retail. The reality is that most customers don’t use a low-price guarantee, but they like to have it when they buy. Just as most rebates go unclaimed, so do claims on an establishment’s low-price guarantee. For most customers, once they make the purchase, they don’t go searching the competitors to find a better price so they can make a claim on the guarantee; they go about their merry way and forget about it. Once they’ve assimilated the product into their daily lives, the price guarantee is virtually forgotten. Therefore, it makes good business since for many retailers to offer such a guarantee; they get the positive effects from it at the point of sale, yet don’t have to pay out on it after the sale.

Skip Anderson