Avram Piltch was looking to buy a new Weatherproof coat. He searched online and found it for $69.99 on Macys.com. Very good deal, but he was hoping to get it that day and try it on. Off he went to Macy's 34th St. store in New York, but there he found it for $112 -- $42 more than the price online.
Naturally, Piltch asked an employee about the online vs. in-store price and if he could get the online price in-store. The response? You'd be better off going home and ordering it on your computer.
Piltch was savvy. He knew the online price before he went to the brick and mortar store, but the fact that there can be such a significant price difference between the online and brick and mortar store might not occur to everyone.
The Price Difference Explanation
"There have always been some companies that have different online prices compared to their brick-and-mortar-store prices," Edgar Dworsky, Editor of Consumer World, told ABC News.
In fact, Consumer Reports singled-out Radio Shack last year in its Naughty & Nice list, dinging the company for charging double the online price for an HDMI cable in stores. Nevertheless, retailers continue to charge more in stores for two main reasons: physical stories have higher overhead, and are run by separate business units.
"The overhead for the Internet store is lower than the overhead for the brick and mortar stores. With the online stores, they aren't paying rent or for the same number of employees," Dworsky said.
The second reason -- that online and in-store sales are usually separate -- is more complicated. "It's been a problem for a lot of these retailers -- they are siloed in different divisions. The online arm doesn't talk to the retail arm," said Michelle Madhok, founder of SheFinds.com and an online shopping expert.
Tod Marks, Senior Editor of Consumer Reports, said, "Some companies are set up do the online arm as a different 'corporate' entity as an explanation for the price variation. Whether consumers choose to believe the explanation is up to them."
Retailers didn't outright explain the reasons for the overpricing in stores to ABC News. "In most cases, Walmart.com has the same prices as Walmart stores," said Walmart's Director of Public Relations, Ravi Jariwala. "However, like our stores, which have the ability to adjust item prices in order to be competitive within their particular trade area, Walmart.com also has to adjust prices on occasion in order to be competitive with key online competitors."
Target's spokesperson said something along the same lines: "We strive to provide competitive prices online and in our stores. At times guests will find different prices based on what we're seeing within the competitive set, whether that's in stores or in the online space."
Macys and Kmart did not respond to ABC News' request to explain why prices are higher in their stores.
Price Matching and Comparison Tools
But not is all lost if you find a lower price online. Some stores, including Target and Best Buy, will match the prices of their online counterparts. As ABC News found last week in World News' "Real Money" story, a Target store in Connecticut sold a Bounce Bounce Tigger toy for $28.99 -- and the same thing for $21 on its website. The store matched the online price and we walked out with the discounted toy.
Walmart, which does have an ad price match policy, doesn't allow in-store customers to price-match the online prices. "Walmart's ad match guarantee does not include online prices," Jariwala told ABC News. As Piltch found out the hard way, Macy's doesn't price-match its online prices either. Macy's website says, "Please accept our apology but at this time Macys.com does not price-match with our competitors." It also says, "Macys.com and Macy's stores operate separately. This means that the products and prices offered at each may be different."
But while it is easy to point fingers at the stores, the experts say shoppers have to be aware of the differences between online and in-store prices. Shoppers can look up the price of items before they head to the store or use smartphone apps like Decide and Red Laser when in stores to check the comparison prices.
They can also do research online before heading out to the store to know the online price. Or they can "showroom," meaning go to the store, check out the product, and then go back home to order it for a cheaper price.
"This goes back to consumer 101: you have to comparison shop," Dworsky said. "You are probably going to overpay if you don't do it."