Courtesy of Zero Hedge
Target updated its smartphone app last Wednesday after a two-month investigation by Minneapolis TV station KARE-TV discovered the retail giant was advertising certain items for one price outside of stores, only to hike the price when a person entered a Target - in one case, by as much as nearly $150.
The station dubbed it the "parking lot price switch."
For instance, Target’s app price for a particular Samsung 55-inch Smart TV was $499.99, but when we pulled into the parking lot of the Minnetonka store that price suddenly increased to $599.99 on the app.
To test this further, we selected 10 products on the Target app at random, ranging from toys to bottled water to vacuum cleaners. We found that when we entered the store, four of the 10 products jumped up in price on the app.
An Apple Watch band went up $2, a Shark vacuum went up $40, a Graco child car seat jumped $72 and a Dyson vacuum shot up $148 on the app while inside the store.
Our list of 10 items was a total of $262 cheaper in the back of the parking lot on the app with no indication that the prices had changed. -KARE-TV
The difference boiled down to Target offering a lower price online vs. in-store, however the online-only pricing wasn't made clear. As KARE-TV noted, "Even if you scan the bar codes of the products on the shelves, which Target suggests customers do to see Cartwheel coupon offers on the app, the app gives no indication that certain prices were far cheaper at Target.com."
In a statement emailed to the station, Target said: "The Target app shows in-store pricing while in store, and online pricing while on the go. If a guest finds any item for a lower price across any of the ways they can shop Target, we'll price match it."
George John – a marketing professor at the University of Minnesota Carlson School of Management thinks Target's explanation is lacking.
"That particular experiment reveals so many interesting facts about our retail environment," said John. "Somebody at Target programmed in an algorithm which says someone who is 50 feet within the store is willing to pay more. The most reasonable explanation is that you just revealed your commitment to buying the product, you're in the store, or in the parking lot. If you are further away, you haven't quite committed, so I'm going to give you a juicier deal. That's why the price went up when you got closer to the store."
How does the app know you've entered a store?
When you download the Target app, it asks you if it can access your location. Enabling this allows you to see stores near you, and when you are inside a store it will show you where to go for specific items and deals. What Target does not clearly tell customers is it appears this function also triggers price changes as you approach the store. -KARE-TV
KARE-TV was first alerted to the "parking lot price switch" by Target shopper Miranda Artz, who noticed the phenomenon while buying an electric razor last spring.
"It was $99.99 in the store, so I bought it," said Artz – only to find that the product was $69.99 on her Target app in the parking lot.
Artz went back in the store to deal with customer service, and noticed that the price had jumped back to $99.99. When she went back out to the parking lot, she noticed the price drop again, so she took a screenshot to show customer service, which then refunded the difference.
"I think it's a little deceptive," said Artz.
Artz said there was a time when Target’s app would alert you to a lower online price, if available, when you scanned a product in store. She said that seemed to change last spring.
Target would not confirm if it used to do this, nor would it confirm when its in-store vs. online price switches started taking effect on the app.
“You should meet the expectations of the customer. If the customer believes they are getting an in-store price, say it is the in-store price,” said John.
There is one quick and easy way to ensure your Target app does not switch any prices when you walk into the store. In the app, click on your name icon in the bottom right of the screen and scroll down to “app settings.” Click “Location” and switch it to “Never.” This switch will no longer permit the app to see your geolocation, and in this setting the app will always show the online prices of products, even if you are standing inside the store. -KARE-TV
KARE-TV repeated the experiment at Best Buy, Walmart and Macy's, however none of them were found to alter prices between inside and outside of stores.