Groupon begins grocery discounts

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Facebook acquisition makes big splash
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Daily discount king Groupon, fresh off filing paperwork with the US Securities and Exchange Commission to hold an initial public offering (IPO), took its first step into grocery retail discounts last month. It launched its first deal with New England grocery store chain Big Y Foods, giving consumers 40% off a pre-packaged seafood purchase. The discount was integrated into Big Y's loyalty program. 

Jim Edwards,

From Groupon's point of view, it seems only logical that it should move into the heart of coupon land. On paper, its email delivery system is a lot cheaper than those operated by Valassis Communications et al. It is not burdened by their legacy analog costs. It's a reasonable notion that online companies like Groupon could do to supermarkets what online news sites did to newspapers. Groupon is extremely easy to use, and there are low switching costs for customers who want to stop clipping coupons and start using Groupon offers. 

Chunka Mui,

The pilot program will help test the efficacy of the Groupon ad model with large retailers, for whom multistore environments and easy integration with existing point-of-sale systems are big issues. Buyers of the pilot program will not redeem them using coupons. Redemption will be integrated with Big Y's loyalty program. 

Sarah Kessler,

Big Y, with its 61 stores, is the first multi-store grocer that the company has partnered with. It's also the first time that any retailer has integrated Groupon into its loyalty card program. As Groupon anticipates its IPO, and analysts' skepticism grows as they pick apart its filings, it's no surprise that the company is searching for new markets to apply to its group-buying model. The company also recently launched a travel deals service with Expedia, a local ticketing service with Live Nation Entertainment and a real-time deals platform. 

Anthony Ha,

Last week, some critics pointed out (justifiably) that even though Groupon's revenue is growing rapidly, its costs are skyrocketing too, suggesting that its business model may not be sustainable...Groupon has said that its vision isn't limited to daily deals, but rather involves a broader aim to "reshape local commerce." The more it can insinuate itself into every part of local business, the better positioned it will be to achieve that vision. Integrating with existing loyalty programs helps, and so does making it into grocery store aisles. 


Grocery retail chains may be the ultimate beneficiaries of this program, assuming that Groupon decides to expand it to other stores and regions. Groupon's brand cachet means that chains such as Big Y could attract new customers to their loyalty programs after only one deal. The program could also help Groupon, which has seen critics throw cold water on its financial disclosures in recent weeks, introduce itself at the local level to a range of new consumers. 


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