Oct 20, 2009
Target jumps into book price-cutting fray
Oct 20, 2009
By Nicole Maestri and Alexandria Sage
SAN FRANCISCO, Oct 19 (Reuters) - Target Corp's (TGT.N) online division said on Monday 19 October it cut the price of highly anticipated hardcover books to $8.99, responding to steep price cuts implemented last week by Amazon.com (AMZN.O) and Walmart.com.
Target.com said it is offering the books, including "Breathless" by Dean Koontz and "Ford County" by John Grisham, for $8.99, including free shipping.
The price wars come two months before the holiday season, which analysts say will be characterized by big promotions. Retailers are hoping consumers associate their brands with value in a year in which unemployment is rising and consumer confidence remains weak.
Last Thursday 15 (October), Walmart.com, the online division of Wal-Mart Stores Inc (WMT.N), cut prices on 10 yet-to-be-released hardcover books to $10 each, sparking a price war with Amazon.com.
After both online retailers then cut their prices on those books to $9 each, late on Friday 16 October Walmart.com shaved a penny off that price and was selling titles such as Sarah Palin's "Going Rogue: An American Life" for $8.99 each -- discounts of nearly 60 percent or more off the cover price.
Richard Hastings, a consumer strategist with Global Hunter Securities, said Target is typically careful about initiating a big price move, preferring to follow and match rivals, while eschewing splashy marketing campaigns.
"This is kind of typical of the way they'll play some of the price wars," he said.
The current competition is based on a select number of high-volume books backed by powerful publishers and is not a wider pricing war.
"It's about bigger volume and faster turnover, things where you have a lot of promotional support (from publishers). It's not a pervasive book war," Hastings said.
Still, prices could fall further. Walmart.com said last week it would adjust its pricing as needed to ensure it offered the lowest prices on its top 10 pre-selling books.
Target has been working to revive sales, which have taken a hit as shoppers hold off on buying its trendy clothes and jewelry during the downturn. The retailer has been emphasizing the "Pay Less" side of its "Expect More. Pay Less." tag line to draw customers into its stores.
It is also trying to erase the perception it says exists among shoppers that its prices are higher than those at larger rival Wal-Mart and it has also been touting its ability to match rivals' prices.
Earlier this month, after Wal-Mart said it would offer more than 100 toys, including Mattel Inc's (MAT.O) Barbie dolls and some board games, for $10 each during the Christmas shopping season, Target fired back with price cuts of as much as 50 percent on toys like Barbie and G.I. Joe.
Neither Wal-Mart nor Amazon responded immediately to a request for comment.
Target shares closed at $50.39 on the New York Stock Exchange. (Reporting by Nicole Maestri and Alexandria Sage; editing by Carol Bishopric and Andre Grenon)
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