Could Groupon’s Deal Enthusiasts Hurt Retailers This Year?

Could Groupon’s Deal Addicts Hurt Retailers This Year?
The Groupons and the Woots of the world have been feeding Black Friday-caliber deals to consumers throughout the year. Have they created a subculture of deal “addicts” who scoff at discounts less than 50% off? Will retailers need to go even deeper to make Black Friday deals attract these hard core deal shoppers? While not all consumers are obsessed with finding the absolute lowest price, this latest Gadgetology study discovered a class of shoppers who buy lots of things through deal sites and they expect deep discounts on what they buy.

Profile of a Deal Addict

Take a look at that collection of shoppers seated in their folding chairs in the cold and rain outside the local Kmart in the predawn hours of Black Friday. Now think about the fact that many of those hard core Black Friday deal hunters are also members of a deal sites like Groupon. In fact, almost three quarters of last year’s Black Friday shoppers (70%) say they are members of deal sites. At the same time, almost the same percentage (70%) of members of deal sites shopped on Black Friday. Furthermore, one of three of those deal site members say they buy most things or almost everything on discount regardless of whether it’s from a deal site or not. We look at that intersecting group as an emerging consumer subculture who are addicted to deals and only buy things if they are deeply discounted.
Women appear to be more connected to deals as they’re nearly twice as likely as men, to buy almost everything at a discounted price. The study also found more women than men indicating they were members of deal sites and saying they frequently use them to purchase things.
What This Means for Retailers
Deal addicts don’t have to wait for Black Friday any longer, they can get a deal “fix” whenever they want from companies like Groupon and other deal sites of the world. These deal providers, for better or for worse, have cultivated a group of consumers with a very high tolerance for deals who expect substantial discounts not only on Black Friday but all the months of the year. According to Manish Rathi, Retrevo.com’s co-founder and vice president of marketing, “It’s hard for today’s retailers to make their Black Friday deals stand out when shoppers have been getting significant discounts throughout the year.” Rathi adds, “This group of consumers isn't easy to please, and they’re willing to hold on to their money until the right deal comes along. We are concerned about the average retailer's ability to provide high caliber deals this Black Friday and even the rest of the year to satisfy this emerging subculture of deal addicts.”

How Low Do Retailers Have to Go?

When we asked deal site members what they considered to be a good deal on various types of products and services we were surprised to see very high expectations. Among deal site members, more than half the respondents needed items to be at least 50% off to be considered a good deal, and this was true across categories. In fact, one in four respondents wanted a 70% off on apparel and shoes.

Groupon is Also Moving
into Retailers Space

Groupon has been in the news lately not only for its upcoming IPO but also because they are expanding into special offers on products (in addition to services) with Groupon Goods. This study found Black Friday product wish lists loaded with a range of products with clothes and shoes topping the list. If consumers are this hungry for deals on these types of products, Groupon could be very successful offering discounts on them.
Conclusion: Retailers Face New Challenge This Black Friday
Although, we assume many consumers are quite happy paying full price for everything from electronics to apparel, there appears to be an emerging class of shoppers who mostly buy things on discount and this group has little trouble finding them all year around from deal sites like Groupon. This group of deal "addicts" comprises a large percentage of Black Friday shoppers. Retailers may have to discount more than ever to satisfy them.
About Retrevo Gadgetology Report
The Retrevo Gadgetology Report is an ongoing study of people and electronics from the consumer electronics shopping and review site Retrevo.com. The data for this report came from a study of online individuals conducted exclusively for Retrevo in October of 2011, by an independent panel. The sample size was over 1,000 distributed across gender, age, income and location in the United States. Most responses have a confidence interval of 4% at a 95% confidence level.
About Retrevo
Retrevo.com is one of the largest consumer electronics review and shopping sites in the world, helping people decide what to buy, when to buy, and where to buy. Retrevo uses artificial intelligence to analyze and graphically summarize more than 100 million real-time data points from across the web to give shoppers the most comprehensive, unbiased, up-to-date product information they need to make smart, confident purchasing decisions for electronics.
To contact Retrevo’s press department about this study, please email: press “at” retrevo “dot” com.

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