As RealityChuck said, it’s to help the smaller stores.
Suppose I have a coupon for a popular item (say, soft drinks). I can go to either Big Foods or Mom’n’Pops Grocery. Let’s assume I buy a lot of soft drinks (I regularly drive the soccer team or something.)
Mom’n’Pops may be closer, but on a popular item the price difference caused by the doubled coupon may be enough to cause me to go to Big Foods instead. And, since I’m going there to get soda I may as well buy the rest of my groceries there. Big Foods gets my business and Mom’n’Pops loses it.
OK, why is the distributor interested in helping Mom’n’Pops stay in business? You think grocery stores make money by selling groceries? They don’t. The margin on groceries is razor thin. Grocery stores make money by selling shelf space. Did you ever notice in a grocery store that the shelves for the big national brands are often being stocked by a worker from that company instead of a store stockperson? Stores will sell some number of feet of shelf space to the distributor for some amount of money. They basically sell the item at cost; they are making their profit from the shelves.
Now, the amount of shelf space (in any given store) is the same whether or not coupons are being used. So, in our example above, the soft drink distributor has payed both Mom’n’Pops and Big Foods for shelf space. But, if everyone is going to Big Foods for their soft drinks then the distributor is getting nothing for their shelf space investment at Mom’n’Pops. And, if the soft drink stock at Big Foods sells out, the customers are likely to buy a competing brand of soft drink at Big Foods rather than make a special trip just for one item.
So, if one store doubles the coupon and the other doesn’t the distributor actually can lose money.
“You can’t run away forever; but there’s nothing wrong with getting a good head start.” — Jim Steinman
Dennis Matheson — Dennis@mountaindiver.com
Hike, Dive, Ski, Climb — www.mountaindiver.com