Much Of Foodtown Chain Abandons Web Coupons

Many—if not all--of the 60 or so stores in the regional Foodtown grocery chain have abandoned accepting Web coupons, pointing to an extremely high fraud rate. But is the move by franchisee owners of Foodtown—with stores in New Jersey, Pennsylvania and New York—a hint about retail unhappiness with Web coupons overall?

Foodtown is far from the first chain to back away from accepting Web coupons, but are Web coupons saveable?

Web coupon fraud "is rampant. All you need is a computer and Photoshop and you're ready to go," said Bob Olstead, the store manager of a Foodtown in Denville, NJ, who added that it is sometimes as long as three months after a coupon is honored before the store's coupon clearinghouse tells them it's bogus and therefore rejected.

Would it make sense for manufacturers to get together and create an database to authenticate Web coupons and to allow chains to access the database as easily as they can verify a credit card? How many more chains must stop accepting the Web coupons before the industry will act?

But the delays here could have a quickly multiplying bad impact. First, consumers with legitimate coupons will be furious with their retailers for denying the coupons. Talk of fraud protection goes over fine if you're asking the consumer to authenticate themselves. But in the fact of an outright refusal to accept the coupon, the consumer could feel insulted at the suggestion that they might have forged a coupon.

There's another psychological factor, though, that could make a delay especially deadly. Consumers are just now accepting Web coupons, which was a big step for them. That is a huge behavioral change, especially for older consumers who have spent much of their lifetime clipping coupons out of the newspaper.

To get consumers to start using online coupons and to then reject them, only to later say "We have online access now. You can start bringing online coupons back in again" could easily be much jerking around for even younger consumers.

Beyond negating negatives, there's a host of positives to be gained from such a database. But what consumer goods manufacturers want more than anything? They want greater visibility into who is buying what and when and why. This would provide all of that.

Retailers could see huge data gains as well. One of the problems with Web coupons is that can exist in unlimited numbers. With today's mechanisms (what mechanisms?), there's no way to enforce a one-per-customer rule, other than enforcing it for that single checkout session.

What if a chain said that it would accept all coupons, but only with a valid loyalty card with perhaps a linked payment card? The coupon use can now be entered into the chaIn's database, which could be instructed to block that customer from using that coupon again. If the database is centrally managed by manufacturers, it could be set to limit usage for that consumer through all participating chains.

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