Retailers’ Woe: Coupon Sharks Are Insatiable
Jonathan Lazar was mad. The Santa Ana resident had collected 88 manufacturer’s coupons for $1 off Ralston Purina’s Bran News cereal and was ready to redeem them all at Vons, a local supermarket chain that doubled coupons. He’d save $2 on every $2.49 box.
Aware of the store’s policy of doubling only three coupons for like items per customer, Lazar planned, as he later explained, “to enter, exit and re-enter the store for as many three-coupon trips as necessary.” But the Vons checker, freaked by the pile of coupons that he didn’t bother to hide, refused to accept them.
Lazar was “enraged and embarrassed” but not defeated. For more than two years, he called and wrote to Vons (which was unresponsive), Ralston Purina (which offered help, then backed off) and anyone else who’d listen, and finally, Oct. 30, sued both in Central Orange County’s small-claims court.
He won. This being a small-claims case, we know only that the judge decided that Lazar’s claim was just. And gave him everything he asked for--$224 ($2 for each coupon), plus postage and court costs.
Manufacturer’s coupons are a well-established form of promotion: Almost 300 billion were distributed last year, with an average face value of 49.8 cents off the given item--an amount sometimes doubled by supermarkets. But such promotions have also been of debatable value to those involved and, at times, a huge headache.
Take Lazar, surely a headache to Vons and Ralston Purina: Neither will comment on Lazar’s suit. Lazar calls himself a “thrift-seeking consumer.” He is in fact a bargain shark, a coupon careerist, a vigilante shopper who will wage war on his belief that “this double-coupon stuff has become a racket.”
The industry had better find a good way to handle such customers. More are coming.
There’s no question that coupons benefit their issuers. According to NCH Promotional Services, the big Chicago-based coupon processor, manufacturers have almost tripled their coupon distribution during the past decade--from 96.4 billion issued in 1980 to last year’s 279.4 billion. They find coupons a good way to “stimulate product trial,” says Patrick Farrell, spokesman for Ralston Purina in St. Louis, “to create excitement and awareness” of a new product, like Bran News, or an old product “re-staged” with some improvement or addition.
It’s a product trial for the manufacturer as well. After the coupon has introduced the product, the manufacturer monitors sales--allowing time for that first purchase to be consumed--to see if the product caught on. Ralston Purina’s Bran News did not, although Lazar liked it.
As a general sales stimulant, moreover, coupons sure beat another alternative--price cuts. As NCH points out, price cuts, once made, “are difficult to reverse in a highly competitive market.”
For retailers, coupons are a mixed blessing--not the coupons per se, for which they’re reimbursed face value plus about 8 cents handling, but their own innovation, the doubling. “People have sort of a love-hate relationship with double coupons,” says Karen Brown, spokesman for the Food Marketing Institute in Washington. Indeed, within the trade, retailers have complained for a decade about doubling, a costly hassle that some say isn’t balanced by sales increases.
Coupons may engender product or brand loyalty, but not store loyalty, even when they’re doubled. Indeed, said one mid-decade study, stores that doubled coupons had no demonstrable increase in either customer loyalty or traffic.
The advantages may simply be hard to demonstrate, which may be why doubling continues in some highly competitive markets. There does seem some competitive disadvantage in stopping: Vons, for example, has experienced a surge in customers when other chains have dropped double coupons. And once into doubling, a store can’t even alter its offer. Vons tried a few years ago to cut the amount it would double from $1 to 50 cents, while lowering prices slightly, but got so many angry letters that it reversed itself.
Such protests notwithstanding, consumer redemption of coupons has actually decreased, according to NCH. While 1980 distribution was doubling by mid-decade and nearly tripling by its end, the percentage redeemed was slowly sinking from 3.95% to 3.24% in mid-decade to 2.53% last year.
Couponing, of course, takes time--particularly the kind that turns cents-off coupons virtually into currency--and most people, as Lazar says, haven’t got it. Lazar, for example, is between two careers (computer programming and, he hopes, law) and can comb through 100 different coupons every day to find the two or three that are useful, pursuing bargains so assiduously that he and his roommate spent less than $1,000 on food last year.
Many consumers could match their normal coupon savings if they just “shopped carefully and compared prices more,” says Steven Koff, president of the Southern California Grocers Assn. If they did, and their retailers could cut out costly promotions such as coupon doubling, they might really save some money.
More likely they’ll do more couponing, given the deepening recession. When NCH surveyed consumers early this year, 75% planned to increase their use of coupons, and over half had already done so. Manufacturers will almost surely feed this inclination with more coupons.
Retailers, be aware: There’ll be a lot of coupon sharks before it’s over.
