Retailers face pushback for digital-only coupons (updated)

Bill would make NJ first in U.S. to require alternative

Kimberly Redmond//January 23, 2023//

Retailers face pushback for digital-only coupons (updated)

Bill would make NJ first in U.S. to require alternative

Kimberly Redmond//January 23, 2023//

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Retailers in New Jersey may soon have to rethink their strategy of digital-only coupons amid concerns that the practice renders the deals inaccessible to some of the shoppers who need them the most. As more and more stores transition to only offering coupons online or in an app, consumer advocates say that seniors and low-income shoppers, who often lack access to technology or the skills to use it, are losing out.

Assemblyman Paul Moriarty, D-4th District

Under a bill sponsored by Assemblyman Paul Moriarty, D-4th District, the Garden State would become the first in the nation to require retailers to provide an in-store, offline alternative coupon of identical value to accommodate both the digitally challenged and digitally disconnected.

Following its Jan. 12 introduction, Assembly Bill 5076 was referred to the Assembly Commerce and Economic Development Committee, which is chaired by Moriarty.

During an interview with NJBIZ about the measure, the assemblyman said, “I just think about fairness. It’s discriminatory to provide discount coupons only to people who have access to the internet, laptops and smartphones. It marginalizes the people who ultimately need the discounts the most.

“I don’t think many of these businesses are purposely trying to marginalize. It’s a convenient way for them to reach consumers, who, more often than not, are on their cell phones and iPads,” he added. “But there are a significant amount who aren’t on phones all the time … they are still paying customers.”

The legislation comes as consumer and public interest organizations are putting pressure on the supermarket industry to “help bridge this digital divide.” In November 2022, a coalition made up of advocacy groups Consumer Action, Consumer Reports, Consumer World, National Consumers League and Public Interest Research Groups, called on grocers to end digital-only discounts, calling them discriminatory against low-income shoppers who lack internet access and seniors who are not tech savvy.

In a letter to the leaders of top U.S. grocery chains, including Albertsons, the parent company of Acme Markets and Kings Food Markets, and Stop & Shop owner Ahold Delhaize, the group took aim at deals that are advertised in-store on shelves or signs, as well as in circulars or TV commercials, but require customers to redeem the offer via a loyalty program account online or through an app.

“While digital versions of manufacturers’ coupons pose similar inaccessibility issues for the digitally disconnected, we are focused on digital versions of store-issued coupons and featured sale items for fresh meat, seafood, produce, store brand products and some name brand products for which you offer special limited-time digital-only discounts,” they said.

Although digitally connected customers can score significant discounts, the practice often puts much-needed grocery store savings out of reach for shoppers without smartphones, internet access or tech know-how, according to the coalition. According to the Pew Research Center, 39% of Americans age 65-plus do not own a smartphone and 25% do not use the internet. And among households with incomes under $30,000, 43% do not have broadband access, research showed.

Supermarket produce

As a result, the coalition estimates that there are “millions” of unplugged shoppers left overpaying a “staggering” amount for groceries, citing grocery chain circulars that advertised a $15 digital-only discount on a 15-pound turkey and a $9 digital savings on a package of steak.

“It’s digital discrimination and the most vulnerable people are being shut out of these online discounts at the worst possible time given record high inflation,” said Edgar Dworsky, founder of the consumer education site Consumer World. “Big supermarkets need to provide an offline alternative to the digitally disconnected so they can reap the same savings that connected shoppers enjoy.”

The coalition also suggested several ways in which chains can offer alternatives to digital coupons.

For instance, some franchises, like ShopRite and Food Lion, are offering physical store coupons of equal value, in addition to digital ones. They also provide in-store kiosks where shoppers can add discounts to their store cards, the advocates said.

The coalition also recommended a practice in place by Albertsons’ California chain Vons and Pennsylvania-based franchise Giant, which uses barcoded “clip or click” store coupons in their circulars, allowing shoppers to pick their preferred redemption method.

Supermarkets should also encourage cashiers to charge the “digital-only” sale price upon request by shoppers and allow customer service personnel to give refunds for missing digital discounts, the coalition said.

According to Dworsky, the supermarket industry’s response to the coalition’s calls “has been silence” or “a bit of misleading PR-spin.” He’s now urging consumers to write to the chief executive officers of major chains to request they “find a way to offer their unplugged customers the same lower sales prices that more digitally capable shoppers pay.”

‘Being mindful’

Moriarty was first drawn to the issue after reading media coverage about the efforts by consumer advocacy groups, saying, “They have been trying to get the major companies to do it voluntarily and hadn’t reached any level of success. I’m very interested in areas of fairness – those issues always interest me.”

In 2018, Moriarty co-sponsored a measure that prohibits discrimination against consumers paying for goods or services with cash. The bill – which was later signed into law by Gov. Phil Murphy – makes it an unlawful practice under the consumer fraud act for a seller to require a buyer to pay with credit only and not accept cash.

“It’s about being mindful of whose out there and who we want to serve. And being inclusive,” he said. “That’s been a huge buzzword for a decade and a half. But inclusivity isn’t just about the shade of skin, size or gender … it’s taking steps to provide access.”

Moriarty is confident that the paper coupon bill will receive support in the state Legislature and said he’s securing a sponsor for a companion bill in the state Senate. If the measure becomes law, penalties would be collected and enforced by the state’s Division of Consumer Affairs and those not in compliance could face fines of $2,500 for a first offense and up to $5,000 for subsequent violations, according to the bill’s draft.

The assemblyman also said he’s open to collaborating with industry stakeholders to amend the proposal to include other options besides paper coupons, like in-store kiosks and point-of-sale discounts.

Offering those alternatives isn’t as simple as it sounds, grocery chains say. Donna Zambo, vice president & chief marketing officer at Iselin-based supermarket co-op Allegiance Retail Services LLC, said, “We are hopeful those reviewing this legislation understand that the lion’s share of digital coupon offers are national offers from consumer-packaged goods companies, who dictate and deem the offer as available and funded only through digital coupon mediums.”

She went on, “This places a burden on local New Jersey retailers to match and fund these national offers in the paper form, therefore putting our New Jersey retailers at a significant disadvantage.”

Allegiance, whose retail network spans more than 125 supermarkets in New Jersey, New York and Pennsylvania under banners including Foodtown, Pathmark, Gristedes and D’Agostino, remains “committed to providing our membership and their customers the best value with quality products at the best costs possible,” Zambo added.

Mary Ellen Peppard, vice president of the New Jersey Food Council

Mary Ellen Peppard, vice president of the New Jersey Food Council, an alliance made up of food retailers and their supplier partners, pointed to the growing preference for digital coupons over the past few years, saying the redemption rates have surpassed traditional paper coupons.

“While the proposed legislation is well intentioned, it would ultimately result in fewer coupons and less savings for shoppers. Business models have evolved beyond paper coupons. Food retailers and manufacturers now partner to maximize digital personalization, which ultimately benefits consumers through efficient and real-time targeted savings,” Peppard said.

“Food retailers are eager to offer customers the best personalized deals; digitizing allows customers to maximize those savings based on their personal preferences and buying habits,” she explained. “Moreover, digital coupons can be provided to customers quicker than traditional paper coupons, resulting in immediate savings.”

Peppard added, “It is also important to note that many digital coupons come from suppliers through national channels and are only available as digital offers. Retailers would no longer be able to offer some of these savings to New Jersey customers if this bill were enacted.”

Karen O’Shea, a spokesperson for Keasbey-based Wakefern Food Corp., the largest retailer-owned U.S. grocery cooperative, told NJBIZ, “Brands are increasing the number of coupons that are only available digitally/electronically. While ShopRite brings these digital savings to customers with coupons on shoprite.com and the ShopRite app, we also realize that some customers may not have access to the internet and mobile devices. As a result, many of our stores have in-store coupon kiosks where shoppers can load digital coupons directly to their ShopRite Price Plus Club card. We started offering such in-store options back in 2015 when we first began rolling out our digital coupon Big Brand Bash promotions. ShopRite also publishes a weekly print circular highlighting store promotions and, in many cases, offering a limited number of paper coupons for customers.”

Editor’s note: This story was updated at 5:06 ET Jan. 23, 2023, to include a comment from Wakefern and at 12:41 p.m. ET Jan. 24, 2023, to correct the name of the Assembly committee.