Pricing has been on my mind a lot lately, not least because Paula and I just wrapped up writing our 7^th annual pricing benchmark (check back on our home page on 4/11 – it’ll be there). But I also came across a recent article from Stores Magazine that really cemented something for me. Two things, actually. One, when retailers change online prices like airlines, stores lose. Two, when you have channel conflict — especially around prices — I strongly believe that retailers under-estimate how much they are breaking trust with their customers, and this will have long term implications that retailers currently ignore.

First one first. Let’s first assume — an enormous assumption — that retailers have the ability to dynamically change prices at the store shelf. Kohl’s, among non-grocery retailers, probably comes closest to this capability today. Certainly in their shoe department, less certainly among other departments. A few grocers have tried out electronic shelf labels — I’ve seen experiments by HEB as well as a couple very small regional chains. But let’s stick with general merchandise: national brands that can be very price competitive.

So say I’m shopping at a big box store. I pick up a Lego set. The store shelf says it’s $19.99. I stick it in my cart. I continue shopping. About 30 minutes later, I go to check out. The Legos ring up at $22.99. I cry foul. The store checks the price on the shelf. It says $23.99, having gone up again in the intervening time between the scan and the price check.

Even if the cashier had the ability to look up past price changes and see that indeed, 30 minutes ago, it was $19.99 (and how would you like to be part of that conversation? Cashier: “What time did you put it in your cart?” Me: “I don’t know! I didn’t realize I needed a time stamp to shop in your store!”), the shopper isn’t going to leave the store happy that they got it at $19.99. They’re going to leave annoyed that your prices are so slippery that they had to fight over a lousy $3-4.

The other way is just as bad — where I decide, “Hey, $23.99 is a great price for these Legos” and then when it gets rung up, it’s $19.99. The retailer just gave away $4 of pure margin — for absolutely no reason.

Why would we even need to explore this kind of scenario? Well, it apparently is happening more and more online. Amazon, Walmart, and Target were clearly playing a game of mutually assured margin destruction last holiday season. And the game centered around, if a shopper was in a store, was the shelf price as good as or even better than what was available competitively online. Black Friday deals were matched the minute store doors opened, and online games during the holiday season yielded maybe a day’s worth of price advantage, and sometimes only an hour’s worth.

Stores have to be at least as good as online prices, or stores are going to lose — you will train your shoppers to trust online first and use stores only as a last resort. And in an environment where stores represent a huge investment, an enormous asset that must be successfully leveraged, training shoppers to go online first does not seem like a smart move. It will only accelerate the trouble that stores are already in. Stores have to live harmoniously with — complementarily to — online. Either that or we’re going to see a lot more schools, gyms, and churches in malls in the very near future.

And that leads to point number two. Channel price conflict breaks trust with shoppers. RSR is not a consumer research company, but if we were, the topic I would most dearly love to research is exactly this issue. If you’re reading this article, you’re most likely fairly tech-savvy, and you have an abiding interest in making retail successful. So I’m betting that you have had this moment, sometime in the last six months: You’re standing at a store shelf. You want to buy this item, but you’re not sure if it’s the best one for you. It may be the best of the choices presented, but is it really the best? You think, I’d better check online, and you pull out your phone. You scan the barcode and price check. The top result — the online version of the item right in front of you, on the same exact retailer’s web site, for 20% less than the price in the store.

What’s the reaction? A little bit of a gut punch. A lot of “Hey! I thought you, Retailer, were looking for me, and I was about to buy this item from you right here, right now. But now that I see your online price, I feel like an idiot. I would have ignorantly paid 20% more for this item without a second thought, simply because I trusted that you weren’t trying to take advantage of me. But now I see that you’re only in this for you, and if I’m going to continue our shopping relationship, I clearly need to look out for myself a heck of a lot more.”

Okay, maybe it’s not quite so articulated as that, what runs through a shopper’s mind in that moment, but the emotional reaction is there. And when anything comes with an emotional hit, it’s just like Pavlov’s dogs. Next time it won’t take you so long to reach for the phone, and the next time that channel conflict is reaffirmed, the harder it will be for the retailer to rebuild trust with you. And if shoppers learn not to trust a retailer’s prices, it’s not that long before they start thinking they’d better check around on assortment too. That shopper’s brand loyalty is now completely in play for any other competitor to grab.

And I don’t need any study or benchmark or data point to know that it’s far more expensive to rebuild trust with a shopper than it is to gain it the first time, or keep it all along.

The reason why I’m making a big deal about this comes from our pricing research (available April 11). Last year retailers were in a panic over showrooming and price matching. Zone pricing was dead. There was no way it could last against price transparency. This year, retailers are much more sanguine about it. They told us in our benchmark that they felt that as long as they had publicized policies that covered their price matching practices — who, and when, and how much — then they could price across channels and zones however they liked.

So let me go back to the online price is 20% less example above. Sure, I could go to a store associate or the cashier with phone in hand and say, “Hey, this is 20% less online. Are you going to price match?” And sure, the cashier will say “Oh yes! We always match our online prices.” But how is that outcome different than the dynamic price example above, where the customer leaves not delighted that she got the lower price, but frustrated that she had to fight for a lower price? That the shopper has to be her own advocate to make sure she gets the best price, instead of being able to trust that the retailer is giving her a good deal?

I don’t see any difference between the two scenarios. And it scares me that retailers don’t seem to recognize at all that this is a problem.