Suspicious deals

It’s been a long time since I’ve eaten at that particular pizzeria. We swore it off ages ago after dumping more than two-thirds of a suspicious-tasting veggie pie into the trash.

But now, more than five years later, there it is: a Groupon offer from that very pizza joint, beckoning in my e-mail box. Only $10 for $20 worth of food!

Without thinking, I excitedly hit the forward button and send it over to my husband forgetting, apparently, how much we actually hate the restaurant in question.

Such is the Cult of Groupon and, in turn, retail hacking.

Groupon, for those of you living under a recession-proof rock, is a deal-of-the-day website localized in more than 150 major markets nationwide, including Sacramento. Like other similar sites—Living Social, Deal of the Day, et al.—Groupon offers up a daily “sale” on a particular restaurant, service or product. The catch is that a set number of people have to agree to buy it and, more importantly, there’s only a very short window of time in which to snag the deal in question.

When you only have 24 hours to purchase glass-blowing lessons, the prospect suddenly seems very, very urgent.

That’s part of the appeal, of course.

Since joining last year, I’ve gotten deals for, among other things, Masullo’s pizza (whose food, incidentally, I’ve never found to be suspicious-tasting), Andy Nguyen’s, Vintage YSJ, Fandango, Harvey’s Lake Tahoe and Black Bear Diner.

I once even purchased a Groupon for an Oakland-based hair salon because the deal they offered was too good to pass up. Never mind that I had to drive 180 miles round-trip to cash it in.

I’ve saved so much money I’m practically broke.

My friends are equally addicted, forwarding Groupon links as if they were cute cat videos or the latest Charlie Sheen meme.

The daily coupon experience, my friend Renee explains, is like a “little prize” to start off her day.

“The first thing I do when I wake up is roll over and grab my iPhone and check the daily Groupon,” she says. “I experience the Groupon high when [the deal] is something I was in the market for or something I needed an excuse to buy.”

But is there too much of a good thing?

Retailers have complained about Groupon. Sure, the deals drive traffic to their businesses—but often at a steep cost.

Such sites can overwhelm a business (one Chicago nail salon unexpectedly sold more than 5,000 coupons for a manicure service), and for every dollar you save, that’s a dollar squeezed out of the business’s profit margin. (Groupon, for example, keeps 50 percent of the sales earned through its business.)

If we’re talking big-buck retailers—Gap,, Barnes & Noble—then, OK, no big deal. But smaller, locally owned retailers might feel a pinch they weren’t expecting. Especially if, as many businesses have complained, Groupon-clutching customers visit to spend only the required amount and then flee, never to return again.

Then again, business is business. And in today’s craptastic economy, this so-called retail hacking—consumer manipulation of cost and services—is becoming the norm, not the exception.

Simply put, a company needs to raise its stakes if it wants to compete. Strong word-of-mouth and price are tops among the factors that will convince someone to try a new restaurant, product or service.

Does this, as some economists have suggested, not just create monster-sized loss leader deals but also cheapen the consumer experience, turning us into deal-hungry consumers, snapping up deals regardless of quality?

Perhaps. But it also creates savvy shoppers who are realizing, via Internet message boards and Craigslist coupon swaps, that it’s getting easier to adopt a never-pay-retail-again ethos.

For the record, I ultimately passed on the suspicious pizza. But the glass-blowing lessons? Tempting. So, so tempting.