Scanned coupons make cents to shoppers, grocers

August 21, 1991|By Charlyne Varkonyi

Not too long ago if the checkout clerk was busy or inattentive, a grocery shopper could redeem a manufacturer's cents-off coupon without buying the size or quantity required.

But these days computer technology is making it impossible to fool even the most harried checker. The same scanners that automatically read the bar code on products for prices are now reading the bar codes on coupons -- instantly telling the cashier if the shopper bought the right size, variety and brand required.

Innocent fooling of checkers combined with outright redemption fraud by con artists has cost the food industry and ultimately the consumer between $300 and $400 million a year. Manufacturers see scanning as a way to make sure that everyone is playing by the rules of the coupon game. Retailers see it as a way to get faster reimbursement from manufacturers and speed their cash flow.

Giant Food, the supermarket chain with nearly one-third of the local market, recently started scanning manufacturer's coupons in all stores. Other major chains who are scanning include Basics Food Stores and some Super Fresh stores.

The coupon scanning mania is spreading from coast to coast. About 10 percent of the 30,000 supermarkets nationwide are currently scanning coupons, according to Timothy Hammonds, senior vice president of the Food Marketing Institute, a trade association for food retailers and wholesalers. He expects the number to double by the end of the year.

"Probably the biggest benefit is it gets shoppers through the checkout more quickly," he says. "Because the data is captured electronically, payment is faster for the retailer. Manufacturers like it because it reduces misredemption by cashiers."

Scanning coupons got a boost from a pilot program, which began in January between Procter & Gamble and Wegmans Food Stores, a regional chain in Rochester, N.Y. The program became available to all retailers July 1.

Here's how it works: Food retailers submit the reimbursement data electronically to P&G and get payment back electronically. Reimbursement now takes five days instead of 30 to 45 days. Having the money returned to their balance sheets sooner saves about a penny per transaction, according to industry estimates.

Depending on the store's needs and commitment to scanning, they may decide to scan only for the value of the coupon or to scan and validate to prove that the customer has actually bought the product required.

Giant Food has been testing coupon scanning for about a year and went chainwide July 12. The scanners read all the information on the code that the manufacturer requires for validation and instantly doubles the value of coupons up to a face value of 50 cents.

Reimbursement can be rejected if the customer buys the wrong size orfails to buy the product.

"If a coupon is not being accepted by the system a generic code appears," says spokesman Mark Roeder. "The cashier is then instructed to look at the coupon and explain to the consumer why it isn't being accepted."

John Ryder, president of Basics Food Stores in Maryland and Virginia, says his stores have been scanning coupons for more than two years. He calls it a powerful marketing tool because dTC consumer shopping patterns can be tracked store-by-store each week.

"We find the system very beneficial to the consumer for speed in the checkout, and it allows us to measure the effectiveness of coupons on items the consumer buys," he says.

But, despite the new popularity of coupon scanning, glitches still exist. And because manufacturers haven't been uniform in their concern for accurate coupon bar coding, chains like Safeway are holding out, according to spokeswoman Anne Cockrell.

Mr. Hammonds says about 90 percent of the manufacturer's coupons now carry the codes, but some still provide inaccurate or insufficient information.

"The store scanning equipment will read the codes properly, but it is up to the manufacturer to print the information properly," he says. "The leading character has to be a five to tell the computer that it is reading a coupon; sometime the manufacturers forget and start the code with a zero. The value printed on the coupon has to be matched on the code. It hasn't been important for the manufacturers to be very disciplined until recently when the stores started scanning coupons. But they are getting better."

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