The retail landscape is in constant motion, driven by the evolving demands of consumers who expect more choice, convenience and innovation every day. In this competitive market, companies are constantly looking for new ways to keep up. One recent move is causing some heads to turn in the industry: Target announced that it is ending its price matching program online and in-store with retail competitors like Amazon and Walmart after 12 years of the policy. This move is especially significant because it clearly refutes claims made in the Federal Trade Commission’s (FTC) case against Amazon, and how Lina Khan’s FTC perceived the retail market as a whole.
For years, price-matching policies at companies like Target were seen as a way for them to maintain traffic and keep prices low and competitive, especially with Walmart and Amazon, both of which consistently offer consumers low prices. Target itself chose to move away from this strategy because trying to match prices with these companies was eating too much into its profits. Meanwhile, these companies and other businesses across the industry are looking for innovative ways to attract shoppers in an increasingly dynamic, multi-channel environment.
What’s the Latest in the Price Wars?
A 2024 Profitero study, which analyzed over 13,000 products across 22 major U.S. retailers, showed that Target’s prices were on average 13% more expensive than Amazon’s on exact-same items. That’s down from 16% in the previous year as Target tries to lower its prices to close that gap. Meanwhile, Walmart’s prices ranged around 5% higher on average from Amazon’s.
This shift shows that companies like Amazon and Walmart, which are focused on offering affordable goods to consumers, are putting pressure on prices to decrease in the retail industry. In contrast, Target made its own decision to stop matching prices against its competitors and refocus its strategy. This directly contradicts a key FTC claim about the market. In its lawsuit against Amazon, the agency asserts the company is causing prices to rise across the retail industry. But the Profitero report contradicts this and shows Amazon, including the independent sellers who sell on Amazon, consistently offers the lowest prices among major online retailers, and its competitors are engaged in fierce rivalries to attract more customers and keep them engaged.
Webrooming Versus Showrooming: How Consumers Browse Before They Buy
Target’s former price matching program applied to both online and in-store purchases and was eliminated for both. This is because customers are frequently comparing online and in-store prices while shopping through various methods to find the best deals on the products they want to buy.
There are two labels for comparisons in the retail industry: webrooming and showrooming. “Webrooming” is where consumers first research products and prices online and then make the final purchase in a physical store. An Accenture report noted that 88% of consumers reported they do this before making a purchase. In contrast, “showrooming” is where a consumer browses products in a physical store and then buys the item online to find the best prices. A 2022 study found that 84% of customers are using this method to purchase.
The use of smartphones is making these practices much more commonplace, showing the critical importance of a multi-channel strategy for major retailers. Online compliments in-store, and vice versa. And this clearly applies to Amazon: the company is going toe-to-toe with its brick-and-mortar and e-competitors as customers engage in webrooming and showrooming more frequently.
This fact contradicts another FTC assertion: that Amazon only competes with online stores. The data and the above mentioned reports and studies demonstrate that consumers are actively comparing and contrasting offline and online deals while shopping. Thus, Amazon does compete on price with not just Target.com—but with all of Target, and Target needed to end its price matching in both channels to improve its profits.
Heated Retail Competition from Companies Like Amazon & Walmart is Driving Prices Down
Looking at this move from Target, it gives us another clear data point that the FTC’s antitrust case against Amazon is based on flawed assumptions.
Monopolists don’t typically try to keep their prices low. A report from the Phoenix Center compliments the data above and also shows Amazon’s prices are, on average, lower than those of major rivals like Walmart and Target. Their analysis found that Amazon’s prices were, on average, approximately 3.5% lower than those of Walmart and Target. Indeed, the author summarizes that there is “no evidence to suggest that Amazon is ‘overcharging its customers’ as the FTC claims.”
U.S. retailers from both online and in-person shopping are looking for creative ways to draw in new customers and keep business. In basic economics, this is a clear sign that companies are facing intense competition. A monopolist, however, does not fear losing customers because they have the market power to raise prices without customers seeking alternative offerings. This is clearly not the case with Amazon.
This episode demonstrates a critical point: far from being a monopolist that raises prices, Amazon’s competitive pricing is a key driver of lower costs for consumers across the entire retail industry.
Conclusion
Target’s decision to drop its price-matching policy provides additional evidence that the retail market is a fiercely competitive arena where companies must constantly innovate to attract today’s savvy consumers. The fact that Target struggled to consistently match the prices of its competitors, particularly Amazon and Walmart, shows that this competition is alive and well, not that consumers are being harmed by a lack of choice.
The FTC claims that Amazon causes prices to rise and that the company is only competing with online retailers doesn’t line up with reality. These assertions are not only contradicted by multiple studies and common consumer practices, but also by the real-world business decisions of another major retailer like Target.
Ultimately, this is a win for consumers as retailers are forced to compete on a range of factors, including price, to earn their business—a clear sign of a healthy, dynamic market—not one that requires heavy-handed government intervention.