CPGmatters: Counterfeit Surge Could Tip Redemption Imbalance to Larger Chains
By Al Heller
Through a special arrangement,
presented here for discussion is a summary of a current article from
the monthly e-zine, CPGmatters.
Two different worlds in
coupon redemption widen the competitive imbalance between larger and smaller
retailers – and add to the ongoing fiscal pressures on CPG manufacturers.
On one hand, large retailers
have the muscle to be paid within 15 days and gain leeway with payers on
questionable coupons submitted. They also have the nerve to take invoice
deductions off of CPG supplier invoices if agents don’t pay them quickly
On the other hand, independents
and smaller chains get relatively shabby treatment even if they are ethical
and comply with payer requirements. One example: it takes 30 days for them
to either be paid on redeemed coupons, or at least notified of a discrepancy
that prevents such payment. Then the real fun of proving legitimacy begins.
That could draw out over months or years because the reason for refusal
to pay isn’t called out, so it requires investigation before an appropriate
challenge can get underway.
Similarly, CPG suppliers
are hurt by unannounced invoice deductions taken by large retailers that
are supposed to equate to the value of coupons redeemed that remain unpaid.
Retailers that do this don’t often articulate the reason, which leaves
the CPG challenged to identify it as a coupon deduction. The CPG then has
to go to the retailer’s portal, look up the debit memo number and find the
retailer’s ‘support’ of the deduction. However, that only gives the dollar
amount and invoices involved, not the reason, such as counterfeit or otherwise
illegitimate coupons. The CPG then has to investigate within its own systems
or the payment agent’s system.
So explains Ron Fischer,
president and founder, RPR Redemption Processing Representatives, which
recently settled a claim on behalf of a retailer that began in 2006. That
time stretch is unusual, but it signifies the cash flow impact such disputes
could have on smaller store operators, or conversely on CPGs.
A sudden rise in counterfeit
coupons could tip industry imbalances even further in favor of larger chains,
suggests Mr. Fischer, because the unregulated industry operates largely
on voluntary guidelines. Trading partners that don’t want to take losses
will pick on whomever they can. That would mean smaller retailers and smaller
CPG manufacturers that lack the resources and the will to fight back.
The non-profit Coupon
Information Corporation (CIC), Alexandria, Va., posted images on its website
(www.cents-off.com) of approximately 100 new counterfeit coupons in January
2010. This compares with an average of six per month throughout 2009, observed
“Some manufacturers will
pay a retailer if counterfeits are in small quantity because they realize
stores accept them in good faith and there aren’t any instant cashier-level
alerts that exist today,” he explained. “RPR (www.rpr-coupons.com) issues
e-mail alerts to member retailers with images of counterfeits. But the
problem is getting the notification down to floor supervisors and cashiers
to keep them from accepting coupons that look good to the naked eye.”
Do you see possible industry-wide solutions to issues surrounding
coupon redemption? Do you agree that it is tougher for smaller stores
versus larger ones? What particular problems have you seen on the vendor side?