Will Ending Its Double Coupon Program Hurt Kroger?

It’s no secret that price plays a significant role in consumer decision-making when it comes to buying groceries. Food store operators from Aldi to Whole Foods are in one way or another pitching savings to capture a greater share of consumer purchases.

It might come as little surprise, therefore, that some consumers are up-in-arms over Kroger’s decision to end double coupons in its Mid-Atlantic region, even after the company announced it was lowering prices on thousands of items as part of its everyday low price strategy.

Consumers, according to the News & Observer, "flooded" Kroger’s Facebook page this weekend to protest the end of double coupons. Several likened Kroger’s action to J.C. Penney’s ill-fated decision to end coupons and sales under former CEO Ron Johnson.

"There’s only so many customers that coupon or double coupon," Carl York, a Kroger spokesperson told the Charleston Daily Mail, "but lower prices across the store help out many more customers."

"I think customers are really going to see their bills go down," Mr. York added.

BrainTrust

Discussion Questions

Which goes further in enhancing a retailer’s price image: double coupon offers or lowering everyday retail prices? Would you have handled the shift in pricing strategy differently than Kroger?

Poll

20 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
David Livingston
David Livingston
10 years ago

Dropping double coupons is probably a good idea. Stores do their best to close the loopholes the extreme couponers exploit, but the stores always lose. Lowering everyday prices is a better move. The highest volume supermarkets in the USA rarely offer double coupons. Sure the extreme couponers might move on, but Kroger wasn’t making money off of them.

Bob Phibbs
Bob Phibbs
10 years ago

There’s more here than just everyday prices. I’m wondering if this is in response to the coupon hoarder craze and limiting the damage they do and the attraction for others.

Steve Montgomery
Steve Montgomery
10 years ago

Consumer perception is the reality that retailers have to deal with. It appears the perception (rightly or wrongly) is that double coupons provide lower cost market baskets than across-the-board price cuts. Another possibility is the double coupon users are simply more vocal (they are losing something they know the value of) than the other shoppers who have yet to realize the savings from the broader based, lower cost items.

J. Peter Deeb
J. Peter Deeb
10 years ago

In the past, retailers who have dropped their double coupons programs have survived the short term fallout that it can cause. Kroger did a good thing in giving customers another program to offset the coupons. I am sure they will use their top-notch, targeted customer offers to address some of those customers who have objections to dropping the double coupons.

Ryan Mathews
Ryan Mathews
10 years ago

Two words: Ask Walmart.

The problem that Kroger and so many other food retailers face is that they have played pricing games with the customer for too many years.

Despite the deepest insights of many marketers, folks ain’t dumb!

Walmart started with price integrity which allowed it to succeed with a modified EDLP approach.

Supermarkets, on the other hand, have had “loyalty card” discounts (code for if you are paying the full shelf price, you are a chump because it’s inflated to offset the loyalty discount); coupons; double coupons; and—in the bad old days—even triple coupons.

So, if you’ve spent the last 30 or 40 years teaching the customer that slash and burn discounts are the only way to get the “best” price, you shouldn’t be too surprised when they get upset when you stop double coupons.

If I had been Kroger, I would have worried a lot more about price impression and a lot less about actual prices. Lowering thousands of prices just tells the customer you’ve been overcharging them for years.

Nikki Baird
Nikki Baird
10 years ago

I find it extremely ironic that this question is posed right beneath the one asking if JCP’s apology for its bungled shift in price strategy worked with shoppers. Shoppers themselves seem to understand the parallels, as noted in the article here.

The question is, how many of those shoppers flooding Kroger’s Facebook page to complain are valuable shoppers? To me, the biggest difference between JCP and Kroger is that not everyone takes advantage of coupons, or pays attention enough to double coupons to notice their end. Are these double-coupon proponents the cherry-picking shoppers that cost more than they bring in value? If so, then kudos to Kroger for recognizing it and putting an end to it – to the benefit of more valuable shoppers.

Gene Hoffman
Gene Hoffman
10 years ago

There is only one grocery retailer that has a low price image. That’s the big Buffalo in Bentonville with its EDLP program. The rest have only promotional images or little or no image at all. Thus I doubt if either game—doubling coupons or lowering everyday retail prices—really firmly enhances a retailer’s price image.

Kroger has apparently decided that it wasn’t making any money off the double coupon users, so they are finally dropping them. (Did anyone think double coupons would last forever?) That move will marginally affect their top line, but probably improve their bottom line.

And to the ardent double coupon crusaders I opine, is your life without double coupons so extremely flat that you have nothing else to grumble at?

Bill Clarke
Bill Clarke
10 years ago

Reported this first on Coupons in the News last Friday, by the way…

But, wow, feels like I’m walking into the lion’s den here, with the comments about “hoarders” and extreme couponers!

The fact is, Walmart does quite well with EDLP and JCPenney failed miserably at it. What works for one retailer won’t necessarily work for them all.

It may be a ridiculous system, but customers are now so accustomed to high-low pricing, sales circulars, loyalty discounts, gas rewards and playing games to get the biggest savings at the grocery store, I think they are very suspicious of any attempt to streamline things with lower prices across the board. After all, it’s easy to quietly raise prices again, but not so easy to reinstate a discontinued policy—once it’s gone, it’s gone.

Before the change, the savvy shopper had the perception that they were in control; knowing they could combine sales with doubled coupons meant there was much more incentive to shop—and save—at Kroger than Walmart. But now Kroger is in control, doing away with a perk that rewards its savviest customers, to benefit the masses who don’t want to work to get a deal.

Kroger is big enough to come out of this unscathed, and the vocal critics will move on, but in the end, what does Kroger have to offer? It will have the same coupon policy as Walmart, but with prices that are only “almost” as low as Walmart. So if this move is meant to better compete with Walmart, Walmart still wins.

Tom Redd
Tom Redd
10 years ago

Change. I am sure that Kroger went through the core list of why change is difficult for the “normal,” non-massively social, “not on their cell all day” shopper, or typical human.

The key elements Kroger might have reviewed before they smacked their shoppers with this new pricing strategy:

  • Fear of change (this is the general issue – we like stuff to stay the same)
  • Being consulted (shoppers like to voice thoughts before major changes to their second home, the grocery store)
  • Poor communications (did they make the change announcement the right way?)
  • Changes to routines (This is the hitter with grocery – it is a routine. You change just small amounts and the shopper knows and can go ballistic. I only do if they move cereal)
  • Low trust (hey, they changed this, what’s next?)

Well, change hurts and in some cases it must happen. I am confident that Kroger had solid reasons for the change to occur and has though about the shopper.

JCP is different and not a fair comparision. JCP was an “I am cool, look at me!” kind of change. Kroger is a stable minded “We need to lift margins or we are going to be in trouble” change, and they also said “we need to stop moving TRedd’s cereal at the Fry’s stores!”

Go Kroger! Change and make the place better. Reflect improvement with change and you win!

Shep Hyken
Shep Hyken
10 years ago

If a retailer is going to compete on price, then it should simply state the low price. It’s that simple. Asking a consumer to bring a coupon to get the lower price puts an extra step in the process. Why do it? If competition has lower prices without the coupon, where will the consumer go? To the place that is most convenient and easy to do business with. Now, if the coupon is to lower the price on an already low (competitively) priced product, then the coupon program works.

This reminds me of an old joke about a store known for high prices having a sale. They said, “It’s a great sale. Everything is marked down to retail.”

Warren Thayer
Warren Thayer
10 years ago

As for which move enhances a retailer’s price image more — coupons or EDLP — it depends entirely on the customer. But IMHO, Kroger did it right. Firing unprofitable customers is always a good move, and you can go to the bank that the double-coupon screamers were, for the most part, costing Kroger money. Let these customers go cherry-pick the competition. Kroger gets a higher percentage of profitable customers, and the competition picks up the cherry-pickers. (And I’ll bet some of those competitors will lean right into that left hook and promote: “We still have double coupons!”) There will be short-term fallout, but over the long haul, Kroger keeps doing things right.

James Tenser
James Tenser
10 years ago

When double couponing slid from a short term promotion into an every-day policy, Kroger had to know it had a problem of its own making. Training customers to game the system is not healthy for the retailer’s price image. The brand marketers don’t like it much either, since it confounds their efforts to establish a value level.

Switching back to a less volatile pricing structure with fewer deep deals reserved for frequent shopper card holders may be a slightly painful transition in the short run. I think Kroger can take the hit and simplify its business for the better.

Ed Rosenbaum
Ed Rosenbaum
10 years ago

My initial response was, “Hello, did you forget J.C. Penney that fast?” I recall Stein Mart did something similar a few years back and had JCP results. Maybe this is something that will work in the grocery silo. It appears it will not work in large box retail.

Lee Kent
Lee Kent
10 years ago

What do we say in retail? Target your best customers. Now, I ask, are the double couponers the best? Not hardly! Kudos to Kroger!

Mark Burr
Mark Burr
10 years ago

The concept of Double Coupons is and always has been dumb with a capital “D”. It is costly to the retailer and effectively takes promotional control away.

There is no other way that Kroger can handle getting out other than to set a date and get out. Their challenge is twofold.

First, if they get out, they have to stay out.

Their second challenge is stated in the article: “‘There’s only so many customers that coupon or double coupon,’ Carl York, a Kroger spokesperson told the Charleston Daily Mail, ‘but lower prices across the store help out many more customers.’” If they claim lower prices across the store as a result of getting out of Double Coupons, they actually have to have lower prices across the store. As Mr. Matthews aptly put it, “Folks ain’t dumb!”

Craig Sundstrom
Craig Sundstrom
10 years ago

Yes, hard to miss the JCP analogy, especially given the ordering of the (last two) questions today, though EDLP has always been much more associated with grocery than dept stores.
As for whether/not it’s a good idea, I don’t know. But there seems to be a fundamental disconnect between the two parts of Mr. York’s statement: that couponers are too few to worry about, but getting rid of them is so big as to allow for large scale price reductions. How??

M. Jericho Banks PhD
M. Jericho Banks PhD
10 years ago

Been in the grocery bidness since the early 70s, and this is what I’ve seen: Every few years, shift marketing strategies from double coupons to EDLP, and then shift back again. This creates excitement among both customers and employees.

Jerome Schindler
Jerome Schindler
10 years ago

I always thought the double coupon promotion stole Walmart’s thunder—the really price conscious consumers recognized that weekly sales and double coupons made Kroger an even better deal than Walmart.

I suspect that over 50% of Kroger customers don’t even use coupons. So it’s a have your cake and eat it too situation. I know my shopping would shift from Kroger to Walmart if Kroger ended double couponing in my market area. In the Columbus,OH metro market, Meijer still offers double coupons—limited to 2 coupons per product. Sam’s Club and Costco don’t take coupons at all. I suspect that their pricing deal with manufacturers take that into account; they get a discount in return for the no coupon policy. BJ’s Club does take coupons. Double couponing is like heroin—hard to quit once you go down that path.

Mike B
Mike B
10 years ago

I may use coupons, but I think this is a good move. Few people use coupons. Those of us who do use coupons use them to our advantage and, potentially, to the detriment of other customers. We use large quantities of coupons and take large quantities of items off the shelf, causing out of stocks that frustrate other customers who are there for the items with no coupon.

Coupons also cause inefficiency at the front end, create more paperwork for the store’s bookkeeping area to deal with… not to mention problems from bad or inaccurately or incorrectly scanned coupons.

I think dropping double coupons and putting that money into lower everyday retails on another block of items (which is what they are doing; they have already eliminated double coupons in a lot of markets) is for the best. Yes, the coupon customers will pay more, but the coupon customer is a very small minority. And if they want to keep them, they can just cut the .30 or .40 off the sale prices that the coupons were saving them and the face value coupon will get the customer the same net price as the old higher sale price with a double coupon. Or, they can make Walmart take more of a hit on the annoyed couponers who take their business there and ask for a price match (creating an inefficiency on the competitor’s front end).

William Passodelis
William Passodelis
10 years ago

Kroger runs an outstanding shopping experience. Bright, clean stores with great assortment. Terrific deli meat and seafood departments. They are an A-1 full line grocer and as for the death of double coupons in their stores—AMEN. Have you ever seen one of those crazy extreme couponers in action? I hate to sound mean, but I once witnessed one where the shopper walked out of the store with $1400.00 in merchandise and paid less than 20 dollars. Everything she did was legal, but some things that are legal are still NOT okay. I felt bad for their bottom line on that day!