Bloomberg News

‘Extreme Couponing’ Shoppers Pose Loyalty Test for Stores: Tech

September 28, 2011

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Sept. 28 (Bloomberg) -- Extreme couponing, a consumer trend spurred on by the reality TV series of the same name, may make deal-chasing U.S. shoppers less loyal to retailers from Kroger Co. to Staples Inc.

In the first half of this year, U.S. consumers redeemed 1.75 billion coupons for a savings of $2 billion, according to NCH Marketing Services. That’s an 18 percent increase from the same period in 2009, when packaged goods companies began stepping up discounts to spur demand, the Deerfield, Illinois- based firm said.

Many consumers are taking their cues from blogs, websites and “Extreme Couponing,” which features regular folks sharing their couponing exploits and starts its second season tonight.

“The main concern to manufacturers and retailers is that they are going to essentially throw away money to one-time buyers and not get a return on that,” said Debra Miller Arbesman, a senior associate at Compete Pulse, a Boston-based marketing firm. “They want to find ways to keep customers loyal so they aren’t wasting their time.”

Packaged goods companies and retailers typically hand out more coupons during hard times. Last year, businesses issued a record $332 billion worth, according to NCH Marketing Services.

The deals come in all shapes and sizes. Staples is giving away a $20 Visa gift card to customers who buy two Hewlett- Packard printer cartridges. Kroger is offering Tyson chicken for 99 cents a pound and $3 off Schick razors. Shoppers who buy any PC, Macintosh or tablet computer at Best Buy Co., the world’s largest consumer electronics retailer, get a year’s worth of Geek Squad tech support for $99.99.

Coupon Aggregation

There is one big difference this time around, though. Coupon aggregation sites such as shopathome.com and Groupon have proliferated, making it easier for consumers to find and compare deals on everything from spaghetti sauce to bridesmaid’s dresses. The debut of the “Extreme Couponing” series this year on the TLC cable channel helped energize the bargain-hunting fervor.

April Blum, a 38-year-old mother of eight from Erie, Pennsylvania, who will appear on the Season 2 premiere of “Extreme Couponing,” said she has saved $50,000 since she began hunting deals in February 2009.

“My husband is a fire-safety officer and we were struggling to make ends meet,” Blum said in a telephone interview yesterday. “Then I just started stockpiling stuff and saw how easy it could be.”

15 Million Visits

Since the “Extreme Couponing” debut, traffic to shopathome.com has more than doubled to 15 million visits a month, according to founder Marc Braunstein.

“The show created an awareness about coupons and made people see that, with a little effort, they could save a lot,” Braunstein said in a telephone interview. “I think it helped bring a lot of people to shopathome.com.”

Blum is not loyal to any particular stores; she peruses deals blogs and shops wherever the bargains are, she said.

“Basically I just spend time surfing those and finding the best deals,” she said. “That’s how I save so much, by using those to decide where I go that week.”

Kroger is among the chains maneuvering to prevent deal- chasing consumers from decamping to rivals. One way is to offer coupons as part of existing loyalty programs, said Keith Dailey, a spokesman for the Cincinnati-based grocery chain.

For example, Kroger’s Plus Card offers shoppers savings of up to $1 off a gallon of gasoline if they stick with the grocer.

“So-called extreme couponers are something that we’re watching,” Dailey said in a phone interview.

CVS Caremark Corp., the largest provider of prescription drugs in the U.S., requires customers to spend cash-back rewards on a future purchase at a CVS location, ensuring they’ll return, Arbesman says.

Woonsocket, Rhode Island-based CVS is relying on its loyalty program to drive “profitable” sales, Chief Executive Officer Larry Merlo said in an August earnings call.

“Even with more people abusing the system, there won’t be a pull-back from the store side on offering coupons,” said shopathome.com founder Braunstein. “People will avoid stores that don’t offer deals.”

--Editors: Kevin Orland, James Callan

To contact the reporter on this story: Ashley Lutz in New York at alutz8@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net


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