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Big Grocery is watching you

Individualized coupons and deals are a new grocery trend. Is targeted marketing unfair?

By Donna_Freedman Aug 27, 2012 11:57AM
Hands catching shopping coupons (© Vstock LLC/Tetra images RF/Getty Images)The Safeway and Kroger grocery chains have begun offering personalized deals based on data collected via store loyalty cards. According to The New York Times, the stores are "creating specific offers and prices, based on shoppers' behaviors, that could encourage them to spend more."

Some personal finance bloggers have called this practice unfair and discriminatory. I respectfully disagree. Targeted deals are just another form of marketing -- and actually, they're nothing new.

Ever hear of a "catalina"? It prints out at the register, usually triggered by something you just bought. Generally it's a manufacturer's coupon, but sometimes it's a discount for your next visit.

You can't get it unless you buy a certain product or return to the retailer. Now that's targeted.

It's completely legal

Online shopping is even more customer-specific. Everything from the time of year you buy to the type of computer you use can affect the price you pay.

According to the Smart Money blog, travelers who use Apple computers will be shown more expensive travel offers than those who use Windows, "as the former typically spend 30% more."

(Not necessarily, though. I use a 3-year-old MacBook but I use buddy passes and ride the Megabus.)

Retailers may shape prices based on location -- those who live close to a company warehouse might get offered free shipping. That's an inexpensive way to boost the chance you'll bite. (Post continues after video.)

Even the season can make a difference. The snow boots you buy in June from San Diego might not cost as much as footwear ordered in late October out of Quinhagak, Alaska.

 

Incidentally, it's not illegal to sculpt prices as long as the differences aren't based on race, sex or religion.

But is it discriminatory?

Blogger "vh" at Funny About Money has half a dozen concerns about consumer-specific pricing. One of them is that targeted deals "lure you to buy products you don't really need."

But that's what stores do all the time. It's called "marketing." Consumers need to protect themselves against ersatz "deals." 

 

"Flexo," founder of Consumerism Commentary, thinks that targeted discounts are a form of "price discrimination." The blogger also cites warehouse clubs, coupon clipping, loyalty-card discounts, and high prices in city versus suburban markets as discriminatory.

But targeted marketing takes it to a new level: "Rather than just a store-to-store or neighborhood-to-neighborhood difference in price, this discrimination can happen within the same store."

Let the buyer beware
Savvy consumers are always trying to stretch a dollar. For example: 

  • Shoppers who leave items in their virtual carts may get emailed coupons from merchants anxious to make the sale.
  • You should rarely, if ever, pay for shipping.
  • If you're charged a late-payment fee, asking the right way might get it refunded.
  • Complaining about bad service can yield good results, if you know how to do it.
But what if you don't know how to do it? What if you weren't aware of free shipping codes? What if you're the nonconfrontational type who accepts the first "no" you get when asking about a late fee?

Is any of that "fair"?

Bottom line: You're not automatically going to get the best price. It's up to you to look for it.

It's also up to you whether to be a part of loyalty-card marketing. But don't fault the stores for wanting to stay in business. All's fair in love and shopping.

More on MSN Money:

14Comments
Aug 27, 2012 1:36PM
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The strangest bit of 'price discrimination' that I have seen was at Walmart.  I went to buy a microwave, they had a model in my local store for $125.  I didn't buy it at that time, figuring I was going to check Target and Home Depot first.  I also did some research on-line.  I went to walmart.com, and found the same microwave there for only $99.  I ordered it online from walmart.com, did the 'ship to store' (free), but since it was in stock at my local store, they just pulled it from their own inventory and put it the back.  I went down within a few hours of placing my order online, and got it for $99!

Same customer, same company, same store, same inventory, different price.  

It is convoluted, but I guess walmart.com is competing with amazon and other on-line retailers, where the physical stores are not competing in that same area.  I guess walmart figures they can charge higher prices at their stores and many people won't notice.
Aug 27, 2012 11:54PM
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I like this practice.  I receive coupons for the products I buy the most, not all the crap I don't.  Some of the coupons Kroger sends are even for free stuff, also the things I buy most.  For somebody like me, who never buys any processed, frozen or kit food, this is much better than receiving coupons for Swanson dinners or potato chips which I wouldn't buy in a million years. Instead, I now receive coupons for fresh produce and meat, which I've never gotten before.  I wish more companies would do this, it would benefit everyone.
Aug 27, 2012 4:13PM
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The beauty of the targeted offers I get from Kroger based on data from my purchasing card is that they are discounts on products I actually use.  Sometimes I get coupons for brands or sizes or flavors that I don't usually use, but with an appropriate discount, I don't mind trying it.
Aug 27, 2012 4:04PM
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I LOVE my shopper loyalty card and rewards!  Kroger sends me coupons via snail mail for specific items I've purchased in the past.  Sometimes coupons are for FREE items.  Last month it was free Jimmy Dean sausage and Kraft dressing.  I'll take it, and I did!
Aug 27, 2012 5:52PM
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First off, discounts are offered by the vendor and not the supermarket. Supermarket net profit is about two percent. When you see sales on any items in the market, they are offered by a single vendor such as General Mills, Kellogg's, Coke, Pepsi, Kraft, Keeblers, Nabisco etc. etc. When different vendors products are combined for discounts, the products are discounted through the vendors. The UPC codes tell the vendors exactly how many of each item is sold per store as well as the whole chain. The Catalina offers specific prices off specific items. Store coupons for items are printed with the supermarket name however are paid for by the vendors. It is called competition for customers. Ever notice what is on sale this week is generally on sale with other markets than the one you shop at. We have to buy food and other items anyway. We shop at Fry's Marketplace for food and receive points for Fry's fuel centers cents off fuel.We generally save fifty to sixty cents off per gallon. A really neat idea is they offer four times points on gift cards. We purchase Southwest gift cards with our Southwest credit card, get four times face value for gasoline points as well as Southwest travel points on the credit card. We shop Costco for bulk items and split with our youngest daughter.  Yes, we positively use coupons, purchase sale items and stock up. Whenever we can save on shopping, it is a big help towards other bills. 
Aug 28, 2012 11:01AM
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It is completely legal for them to gauge gas prices too. EX. if you were to spend $2000 in these grocery stores in a 6 week period you can save $2 off a gallon of gas for 1 fill up!
Aug 27, 2012 9:30PM
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This isn't news! They've been doing this for years.

How about catching up to modern times and current events Donna Freedman??

Aug 28, 2012 1:38PM
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Predatory retail practices...customer manipulation...artificial price inflation...deceptive merchandising...greed?  Gee, welcome to the human race, folks!
Aug 28, 2012 10:28AM
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One thing about this is the author is only looking at the 'positive' aspects of this practice.

 

But what about the sinister.  Lets say you buy a certain product, say a named cheese every week.  They know you're going to buy that product every week.  So then the store doesn't clearly list their discounts for their loyalty cards and instead of giving you the full $0.50 off on the product, they cut your coupon to $0.25 cents and pocket the other $0.25 from the Vendor.

 

Then subject B who doesn't buy that cheese every week gets the full coupon discounted price of $0.50 off that same cheese because they are trying to encourage him to buy more of it.

 

That's discriminatory pricing, and should be flat out illegal, but according to the author's logic it's completely fair game.

Aug 28, 2012 10:58AM
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My Gosh!!  When will people realize that a big part of the food industry is directed on the path of killing us.  It is widely known that products containing sugars, salts and fats along with meats are in excessive use and the medical profession is just around the corner with stratospheric pricing to mend that which can not be mended.    Wake up little lambs!
Aug 27, 2012 4:50PM
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This is Corporate Welfare. It's not MY job to subsidize their bottom line. It's THEIR job to manage their cost control and buying practices in order to increase their profit margin.  Time to shop...OTHER than Krogers or Safeway. (Hope the .05 they think they stiffed me for was worth the loss of the $145 a week sale).
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Donna Freedman

Donna Freedman, a writer based in Anchorage, Alaska, writes the Frugal Nation blog for MSN Money. She won regional and national prizes during an 18-year newspaper career and earned a college degree in midlife without taking out student loans. Donna also writes about the frugal life for her own site, Surviving and Thriving.

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