Cents-Off Store Coupons Are Less Than Meets the Eye
SURELY the most wasteful, expensive, time-consuming, and ultimately pointless merchandising device ever contrived has to be the manufacturer's cents-off coupon. These coupons enable manufacturers to overprice their products in the first place and then to return a portion of the overcharge by broadsiding something like half a trillion coupons a year, each of which, presented to a retailer at the time of purchase, affords a reduction of 10 cents to $1 from the wantonly inflated price of the article.
All over this land, supermarket aisles are clogged with harried homemakers trying to keep their toddlers quiet while leafing through sheafs of coupons.
For the most part, these coupons do not represent mere occasional cuts in price - they are chronic and incessant. I do not ever pay the nominal price for the three cold cereals that I buy. The shelf price is a mere figment, paid primarily by the illiterate or the semiliterate, and hence mercilessly regressive.
It is the prosperous, who read easily and who can flit from store to store, who make the greatest killing from coupons, or rather who suffer the least from them. Yet newspapers that are supposedly passionately opposed to regressive taxation acquiesce in this regressive devise for the sake of the revenue.
Coupons might perhaps be harmless if they were cost-free; actually they are nothing of the sort, for three reasons: (1) They are flung out to the purchaser by a variety of high-cost methods: free-standing inserts in Sunday papers or tucked into the food or other sections of the daily papers; they are imbedded in the fabric of cereal boxes or packed loose in the bottoms of the boxes); they are mailed en masse by some companies such as Carol Wright, Inc.; (2) An 8-cent handling charge is paid to the retail er for each coupon redeemed, which probably costs American consumers about $500 million a year; (3) processing the coupons at check-out, which entails matching the coupons proffered with the goods purchased and returning those that are incorrect, is carried on by very highly-paid unionized checkers, who are also paid by the ultimate consumer. After the coupons leave the hands of the retailer, they must be collated and sorted by expensively computerized processing agencies, also paid by the consumer.
Let no one imagine that the costs are absorbed by hard-up issuers at the cost of reduced earnings.
According to the 1992 Forbes Report on American Industry, that industry as a whole has earned an average of 13.2 percent on equity over the past five years.
Comparable earnings for intensive coupon issuers: General Mills, 52.3 percent; Ralston Purina, 38.1 percent; Kellogg, 34.9 percent; Heinz, 27.2 percent; Quaker Oats, 24.2 percent, and so on. Intensive coupon redeemers like Food Lion and Giant Food have raked in 32.3 percent and 24.9 percent, respectively. The only loser is the consumer, who pays the 8 cents, the advertising cost, and the processing costs.
So long as coupons exist, it is folly not to use them, of course. I estimate that a family of five would lose at least $250 a year by not using them; and that is the cost to the marginally literate family that I posited above, a cost that comes out of the nutrition of their three children. Why has there been no agitation against them?
Presumably because our influential economists, talk show hosts, and militant activists have their feet planted so firmly in the clouds and are so remotely placed from anything so boring and middle-class as a supermarket that they don't even know that coupons exist. So the country as a whole probably expends a couple of billion dollars a year on the dopey little things.
What is desperately needed is a concerted effort by consumer activists, nutrition experts, and food columnists to give vocal and vigorous support to the first manufacturer with the courage to announce: "Instead of pricing my cereal at $3.50 and printing two billion 75 cent coupons, I will save the cost of the coupon, the newspaper space to house it in, the 8 cents to the retailer, the costs of the processing agency, and all the other ancillary costs, and place the box on the shelf, naked and unashamed, a t $2.50, and spare all this hassle."