The main selling point for Groupon, LivingSocial, and other daily deal vendors is how much the consumer saves through the use of discounted vouchers. But a couple of new studies demonstrate a point that should be obvious, but often seems to be overlooked: Despite the discounted prices, when it comes to purchasing massages, restaurant meals, event tickets, and other daily deals, the net result isn’t money saved—it’s money spent.
Daily deals are basically all about attracting disposable income. The typical daily deal purchase isn’t remotely essential—see above for a few of the most common purchases—and their main function is to strategically entice the consumer into making a purchase that otherwise probably wouldn’t occur. The consumer’s disposable income is therefore disposed of, but the money that’s spent could have just as easily been saved. Hence, money leaving your wallet, not entering your savings account.
If daily deals were truly about saving money, then it’d make sense that the poorer members of society would use them as a means to make ends meet. This isn’t the case. Wealthier individuals are far more likely to be daily deal customers.
(MORE: The Backlash Against Daily Deals)
Citing data from the consulting firm Accenture, the Chicago Tribune notes that 54% of households with incomes of $150,000 and above are registered to receive daily deal offers, compared to just 27% of households with income of $35K or less.
A study about daily deals and restaurants conducted by researchers from Cornell and Rice universities, meanwhile, says that frugal, cheapskate types don’t really fit the daily deal demographic:
People who had purchased a restaurant daily deal tended to be younger, have a higher income and live in urban or suburban areas. … We also found that some cannibalization of existing customers may be occurring, that daily deal users were not necessarily ‘cheap’, were likely to tip on the full amount of the bill and were no less likely to be loyal than non-users.
Restaurants and other businesses resorting to daily deals must love that the promotions are attracting fairly well-off clientele. So daily deals can be good deals for businesses. But what about consumers? Those who have jumped onto the daily deal bandwagon with the hopes of genuinely saving money are fooling themselves, and are prone to suffer from what’s been dubbed “Groupon remorse.”
To truly save, one is better off looking to the daily deal’s uncool, old-fashioned, fuddy-duddy predecessor: the coupon. As a DailyFinance post explained:
Most Groupons aren’t meant for us; they’re meant for retailers. Groupons offer a way to entice average Janes and Joes to try something they otherwise wouldn’t. Grouponing is for adventure seekers.
Couponing, on the other hand, is for smart shoppers.
That is: If you’re saving on something you’d otherwise be paying full price for, then you’re actually saving. Well done, savvy shopper. If, on the other hand, the sudden presence of a daily deal prods you into buying something you never would have otherwise considered, then it’s best to view the situation for what it is: a splurge.
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It might be a fun splurge, and an overall decent value. But let’s not kid anyone: When you’re splurging, you’re not saving.