Cheap People Don’t Harm Retailer’s Profits

What: The long held belief in the retail industry that coupon loving folks (called devils by the retail industry- SERIOUSLY), had a negative impact on a grocery store’s bottom line appears to be not true, according to the folks at the Yale School of Management, who must have used coupons to help establish the University’s $18 billion dollar endowment.

What the Yalie’s say:

This customer segment — dubbed as ‘devils’ in retail — has been widely speculated to be a significant drain on retailer profits. However, the first research to quantify their effect finds that they are only about 1% of a grocery store’s customers and reduce the retailer’s profit by less than 0.2%

What I say: I just love the often negative terms people in industries like retail and credit cards use to describe people who resist the urge to over consume. We’re devils cause we use coupons and become deadbeats when we pay our credit card bills in full each month.

Read a previous post about the credit card industry

For great beach reading, read the entire paper “The Temporal and Spatial Dimensions of Price Search: Insights from Matching Household Survey and Purchase Data

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Comments

  1. Tessa says

    Thanks so much for the data. I really respect how you use legitimate research sources like Yale.

    I have heard this myth about a year ago when our local Vons stopped doubling coupons. My mom, being a loyal Vons customer, was so annoyed she refused to continue shopping there. Now, a year later, they are doubling coupons for “a limited time only” but she won’t go back. So, I think companies attitudes towards “deadbeats” is somewhat harmful to them. After all, we the ones who actually have the cold hard cash. 

    Thanks for such a great blog!

  2. katrina says

    i completely agree. i work at a high end boutique and you wouldn’t imagine some of the things my co-workers will say when a customer leaves the store and doesn’t buy anything. like – “oh she’s a SALE girl.  you know that woman only buys stuff on sale.”  or “did you see how she was dressed?  she should go somewhere AFFORDABLE for her”  As if living within one’s means is something to laugh at!!!?

  3. Allison says

    I just don’t get it…if they’re so upset by the people who are intelligent enough to clip coupons and want to call us “devils”, why create the coupon system in the first place?

  4. Rit says

    Yes, this is so true.  Did you ever notice when your balance is high, or outrageous, the credit card issuers raise your credit limit to entice you to go into even more debt?  And they wondered why people filed bankruptcy and then lobbied hard for a passage of stricter guidelines for eligibility.

  5. Jen says

    As someone who works at a grocery store, I have never heard people refered to as “devils” (well, not in this context).  We call them “cherry pickers” and this refers to people who come in and buy our best deals, the ones where we actually have to pay people to bring in stuff, say pop, at cost to us, and then go down the street and do the same to the next guy.  We pay money so that those pop companies can bring in pop because we assume the below-cost price will bring in customers who will buy stuff that we will make an actual profit on, so we can pay our employees. 

    I saw that article earlier and was thrilled, because we do worry about our profits. 

    Actually, we don’t so much care if you come in and buy one case of pop and leave.  You know who is annoying?  7-11 owners who come in and buy carts of the pop to fill their stores with.  They do this instead of working with the companies like we have to.  Its obnoxious.

  6. faun says

    they can bite me…i don’t pay full price for anything and i work in retail. i have never called a coupon wielding customer a devil.

  7. psychotwilightgirl says

    I have been working in retail for almost ten years, and I have never heard the term “devil” used for a customer that uses coupons. Also, it is all about the attitude that one uses when using coupons. If you are annoying and ignorant about your coupons (i.e. giving the cashier expired ones, not matching the coupon to the actual product being purchased, etc.) then YES, anyone within their right mind, retail or not would hate you. Other than that I am a complete frugalie and I <3 coupons.

  8. TBF says

    The devil term is used at more at the corporate level. Can you imagine what would happen if it was used with store based employees who tend to live in the community where the store is located? Total madness

  9. caliente says

    Great post.  I hate how I sometimes feel embarrassed about shopping in the sale section all the time.

    And to be honest, sales and clearance items lead to MORE spending.  I don’t NEED most of the stuff I buy.  Plus, we help to clear the sales racks so new merchandise can come in.  It’s a symbiotic relationship really.

    For a lot of things, it’s sale price or no purchase at all.  Sorry, but I’m not buying it at full price.

    Deadbeat is offensive!  I charge a lot to my credit card, even though I pay it off each month.  I’m sure the cc companies are getting paid by the retailer via a transaction fee.

  10. Judy says

    Oh…pleeeeease give me a break…shoppers with coupons drain profits?  Then why aren’t these retailers going out of business?  The markups on most items more than compensate for those of us who use coupons.

  11. Kathleen says

    I visited the PBS website and the information on the credit card industry was very informative.  I love how a term like “deadbeat,” usually reserved for parents who don’t pay alimony to their ex-wives or husbands, is applied to those who are smart enough to pay their credit card bills in full each month—so ironic.

    I’m insulted that the corporate world calls people who use coupons devils.  If you’re stretching every dollar to make ends meet, those coupons make a big difference—and I would rather use a coupon than pay full price any day!

  12. Maria says

    I wish that more companies would use “coupons for a cause”.  This past weekend my local Macy’s had a promotion where if you bought a $5 “day pass” (with 100% of proceeds going to local charities) you got a card that was good for 20% off any merchandise, even if it was already on sale or clearance.  That not only encouraged me to buy more (wink, wink!) but made me feel like I was contributing to a good cause, too.

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