Retailers That Offer Price Matching Is Actually Anti-Competitive, Contrary to Popular Belief

Wondering if anyone has the same feeling that price matching policies are actually anti-competitive. Having policies like this allow retailers to say things like "lowest prices guaranteed" or "if you find a better price, we'll match it" without making the effort to be the cheapest. The only exception I can think of is Officeworks which actually beats the price by 5%, which I think is actually good for competition.

For most other retailers, consumers end up doing the retailers' work for them and these business effectively engage in indirect price discrimination, which would otherwise be illegal. The impression that it gives to the general public is that the retailer is competitive because they offer the option of matching any advertised price, and only a minority of consumers actually benefit from price matching (assuming the number of sales made through shelf price is more than the number of sales done through price matching, which seems like a reasonable assumption).

These retailers end up getting business from price sensitive consumers, who would otherwise not have bought through them, without having to compete on price in the broader market.

I feel like the net effect over time is that consumers end up paying more due to decreased price competition as all retailers adopt the same policy rather than reducing prices to get more business.

So let me know, do you think it's anti-competitive?

Poll Options

  • 36
    Yes
  • 0
    Yes, but it's worth it as it increases the number of stores I can shop at
  • 13
    No, it improves competition

Comments

  • +7

    As long as nobody forces me to buy from grub hardly normal….

  • +4

    OW, CWH, Bunnings, etc.

    Anti-Competitive

    You mean reduces price competition? Of course, no business wants to compete on price. These price matching business are signalling to others that they'll get tit for tat if they drop their prices.

    This is just one way to reduce price competition, other ways include having different model numbers for the same product (guess who?), different bundles and different service/brand offerings (e.g. LVMH and other luxury good manufacturers).

  • +5

    Happy with price beat.

    Price match, only if I have gift cards I need to use or from a convenient location, otherwise would shop at the place offering the lower overall price.

    Some places have “dodgy” price match anyways, as they won’t do below their “cost” price.

    • In some cases I'm pretty sure it's not even a case of below their cost but below their acceptable margin. I get not matching obvious price errors but you shouldn't get the marketing of price match and then pick and choose if you will honor that because you want a 15% bottom margin instead of a 10%.

  • +2

    I think your sensible views and poll are an outlier around here!

  • +5

    buy from the store or site that offers it for less, theyre the ones that deserve your money by offering you a discounted price,
    not the slack asses that "say" theyll price match.

  • Being anti competitive is good business. Bad for customers, good for business tho.

  • Big retail strikes again…
    It's collusion, they're all members of a price matching alliance that sets a broader range of tolerable margins..

  • i guess it depends if you live in woop woop and for example you only got an EB games near you i guess the price matching 'will save you a drive' into town or the cost of postage but other then that i hardly ever price match i usually just buy from the cheapest source but i live in Melbourne Metro so i got everything 'near by' however i acknowledge not everyone can say the same

    as he post says 'price beat' is a different story it makes things much cheaper and 'super' competitive

    • +1

      Agree that it could make shopping more convenient, though a lot of retailers put a "brick and mortar stores within X kilometres" qualifier in their price match policies.

      • of course, i guess the option being there 'doesnt hurt'

        retailers 'bank' on a laziness tax in which people dont shop around so they just 'pay a premium' or rrp or as close to rrp as the retailer can sell crap for

        but having the price match promise also captures the bargain buyers like people on Ozbargain obviously price beat is much better as it ensure you always get bargain hunters however it also results in selling items for a marginal loss at times…

        overall price matching 'widens addressable' market and at the same times keeps margins as 'fat as possible'

  • One other side effect of price matching is you may find a smaller retailer with it cheaper and then use that to buy the product even cheaper at a bigger retailer. Yes, you got the product at a cheaper price, but the smaller retailer lost out on the sale.

    I can see this process reducing competition in the long run.

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