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Groupon Grocery Discounts: Buyers Beware

Groupon's world is expanding into the grocery space. The Chicago-based company said this week it was teaming up with New England supermarket chain Big Y and testing grocery deals. The first deal for Big Y's Springfield, Mass., shoppers was a "Shellfish Grill Pack," normally priced at $39.99: To get it for $24, shoppers had to show the voucher and sign up for Big Y's loyalty program membership.

Groceries comprise a large chunk of the average family's monthly budget, with Americans spending an estimated $550 billion on groceries every year. So Groupon's plans to expand its deal offerings to include food and packaged-good supermarket deals could help us save.

Or, they could simply get us to spend more. Here are a few potential reasons why:

Promotions for Foods You Don't Really Need
I wonder how useful Groupon's deals will actually be. Like with coupons, we may find that many of the promotions are for brand-new products that supermarkets want to entice shoppers to buy. Or they could be for products that are out of the ordinary: Big Y's deal on the "Shellfish Grill Pack," while 60% off, is not exactly a shopping list essential. If we get enticed by the discount and buy it anyway, we wind up spending money we wouldn't have, just to earn the discount.

Signing Up For Loyalty Programs
The risk here is that joining a loyalty rewards program could result in increased spending. In the book Loyalty Myths, a study by author Timothy L. Keiningham found consumers spent 48% more money at supermarkets offering loyalty programs. It makes sense: We justify spending more to earn the rewards.

Groupon Remorse - Yes, It Exists
As it stands, many shoppers who jump at the chance to buy vouchers from Groupon and similar Web sites - for, say, 80% off trapeze classes or 60% off baked goods - are just throwing their money away. By some accounts 20% to 30% of buyers let their vouchers go to waste for various reasons. Among them: failing to read the fine print (which often indicates short redemption periods), not wanting to drive out of the way to redeem the voucher - and, last but not least, forgetfulness.

Farnoosh Torabi is a personal finance journalist and commentator. She is the author of the new book Psych Yourself Rich, Get the Mindset and Discipline You Need to Build Your Financial Life. Follow her at
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