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Is price matching good business or does it signal vulnerability?

Stocks in this article: AMZNSPLSJCPAAPLSHLD

By Robbie Citrino for Kapitall.

Staples (SPLS) has become the most recent retailer to institute price-matching in a bid to lure shoppers in for back-to-school shopping. Facing declining revenues over the past four years the office supplies retailer is using this margin-cutting tactic to win over potential customers.

But is price matching a sign of vulnerability? On one hand it seems good business sense to sacrifice margins for customers. But history tells a more complicated story.

In 2011  J. C. Penney (JCP) instituted a price-matching policy when Apple (AAPL) executive Ron Johnson joined the board. Since this change, the company has lost almost 74% of its market capitalization.

Sears (SHLD) is another struggling retailer facing competition from Amazon that brought price-matching to its stores in 2011. At the time the move was aimed at people coming in to look at items they intended to purchase online.

The company has since posted losses per share in every quarter, and their stock has dropped about 60%. This all happened despite the fact that the market rose during the period.

Countless others have fallen to online retail despite their price-matching efforts. Will Staples be a different story? Use the list below to begin your analysis and let us know what you think in the comments. 

Click on the interactive chart to view data over time. 

 

 

1. Amazon.com Inc. ( AMZN, Earnings, Analysts, Financials): Operates as an online retailer in North America and internationally. Market cap at $149.19B, most recent closing price at $324.20. 

 

 

2. Staples, Inc. ( SPLS, Earnings, Analysts, Financials): Operates as an office products company. Market cap at $7.24B, most recent closing price at $11.19. 

 

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