Target expands price-matching. Can it compete with Amazon, Wal-Mart?

Target is expanding its price-matching policies in time for the holidays, but will the changes make it more competitive against its retail rivals?

Brendan McDermid/Reuters/File
Customers shop in the pharmacy department of a Target store in the Brooklyn borough of New York (June 15).

Retail giant Target is expanding its price-matching policy in time for the holiday season.

Target Corp. said it will match prices of 29 of its rivals in stores and online for 14 days, either in-store, online, or over the phone. The move is a major expansion of the company’s previous price-matching policy, which allowed a seven-day window and in stores only. 

The extended list is also making news for including major Target rivals Amazon and Wal-Mart for the first time. Wal-Mart, the brick-and-mortar retail giant with an increasing online presence, has long had Target.com on its price-match list, but Target has not offered to match Wal-Mart previously. The list also contains other online-only stores like Wayfair and Newegg, as well as membership-only stores like Costco and Sam’s Club.

"These are simple changes, but they mean a lot for our guests," Jason Goldberger, president of Target.com said at a meeting with store managers in Minneapolis.

Target’s e-commerce business has been a major source of growth for the company. Last quarter, the e-commerce business sales increased by 30 percent in 2014. Target has also rolled out more competitive online policies. This past holiday season, the retailer lowered the minimum-shipping threshold to $25 from $50 and offered free shipping with no minimum threshold.

Even with recent successes and adoption of online-friendly policies, the question remains over whether Target can compete with large rivals Amazon and Wal-Mart.

Wal-Mart has US sales four times larger than Target, but even it has had a lot of catching up to do online. According to Fortune, both retailers were getting 3 percent of sales through digital commerce compared to the industry norm of 6 percent in March. But, while Target’s digital sales rose 40 percent during the last holiday quarter, Wal-Mart jumped only 18 percent.

“Target’s more nimble size allows agility to drive sustainably higher online growth,” Cowen analysts wrote, according to Fortune.

Neither brick-and-mortar retailer, however, has offered a competitive equivalent to Amazon’s "Amazon Prime" membership, which offers free 2-day shipping nationwide, along with other perks. Amazon has also started rolling out a new Amazon Now membership program that offers 1-hour delivery in select cities.

The coming holiday season will be a competitive one. Consulting firm AlixPartners predicts an increase in holiday sales from 2.8 percent to 3.4 percent this season from 2014, according to Fortune.

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