Target App Lured Customers With Lower Prices, Which Mysteriously Increased As Users Approached Store
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."