More than two years after a New Jersey state lawmaker first proposed regulating digital grocery coupons, and five other states considered their own measures, San Diego has just come a major step closer to becoming the first jurisdiction in the country to officially mandate that stores provide paper versions of all digital coupons. Supporters say it will make the system more fair for the digitally-disengaged. Opponents worry the measure is overbroad and could have unintended consequences that result in fewer coupons and higher prices for everyone.
The City Council on Monday unanimously voted in favor of an ordinance stating that “any grocery store that offers digital discounts to consumers for the purchase of goods must make physical coupons for the digital price available to consumers upon request.”
The measure will be heard in a second reading in the coming weeks. If it again passes with a veto-proof majority, it will take effect 90 days afterwards.
Stores that advertise “digital deals” or offer digital coupons end up “disadvantaging those in the ‘digital divide,’ or those who do not have ready access to or comfort with computers, smartphones, other digital devices, and the internet,” a summary of the Grocery Pricing Transparency Ordinance reads. “This often includes seniors, low-income households, and nonnative English speakers.” So the ordinance aims to “prevent discriminatory practices that restrict discounted prices to consumers exclusively through the internet or other electronic methods, and to promote transparency and consumer fairness.”
A petition in support of the measure, circulated before today’s vote, put it more bluntly: “Corporate grocery chains are making it harder — not easier — for San Diegans to save money on essential groceries,” it stated. “As prices skyrocket, these corporations have moved more and more discounts behind digital walls, forcing customers to jump through hoops just to access fair prices.” Calling the system a “rigged game,” the petition said “digital-only discounts shut out seniors, working families, and low-income households, forcing them to pay more for basic necessities. This is unacceptable.”
Democratic councilmember Sean Elo-Rivera, who sponsored the measure, called it “a bold proposal to stop corporate pricing tricks and ensure every San Diegan gets a fair deal at the grocery store. When you take a trip to the store, you should feel confident that you’re getting the best deal advertised if you’re doing everything right. And those same deals should be accessible to everyone.”
The issue first gained national prominence three years ago. That’s when consumer advocate and Consumer World founder Edgar Dworsky called attention to many grocery stores’ practice of prominently advertising prices in their weekly circulars that the small print disclosed could only be obtained if you first “activated” the deal or clipped a digital coupon in the store’s app or website. Dworsky and other consumer groups sent letters to a dozen major grocery chains, urging them to offer “an offline alternative” to digital-only “store-issued coupons and featured sale items.”
As state lawmakers got involved, introducing bills to address the issue, their proposed solutions were more far-reaching, seeking to regulate any form of digital discount – not limited to advertised “digital deal” prices, but including digital manufacturer’s coupons. And instead of requiring an unspecified “offline alternative,” many called for printed versions of digital coupons.
And some retailers were quick to point out that requiring them to offer paper versions of every digital manufacturer’s coupon would be difficult, costly, cumbersome, if not outright impossible. As of this writing, San Diego’s two largest grocery retailers – Ralphs and Vons – offer a combined total of more than 1,000 individual digital coupons, for products made by countless individual manufacturers. Each of those manufacturers could be required to provide sufficient paper copies of each of their digital coupons to every San Diego grocery store in order to be in compliance with the new ordinance.
And if they don’t, the retailers will be held responsible. Violators could be fined up to $2,500 per violation – upped to $5,000 if “acts of unfair competition are perpetrated against one or more senior citizens.”
“We do not have any issues with helping to bridge the digital divide,” Tim James of the California Grocers Association told the council today. “Our issue is with the language of the ordinance… currently it’s written in such a simplistic and broad way that it would not be able to be implemented by grocers.” He pleaded for a delay in implementation, warning that “the impact could be a significant and severe loss of all coupons and discounts for the city.”
“We accepted all meetings with those who requested them” since first announcing the measure last October, Elo-Rivera countered. “We’ve crafted this in such a way that implementation is actually quite simple.” Referring to other states’ failed attempts to pass similar measures, those efforts “were squashed when industry stepped in and successful lobbying efforts killed the effort,” Elo-Rivera said. “I’m confident that that will not be the case today.”
Some industry concerns involve the phrasing of the ordinance, which defines a digital discount as “a store coupon, rebate, or similar instrument that is offered to consumers exclusively through the internet or any other digital or electronic means,” but it does not specify whether that literally means “store coupons” only, or manufacturer’s coupons offered via a store’s website or app. It also defines a grocery store as “a business, supermarket or warehouse club engaged primarily in the retail sale of goods,” which could be read to include not only grocery stores, but drug stores, dollar stores and even convenience stores that offer and accept coupons.
And it states that any “digital discount price must be clearly shown where goods are displayed or on each individual item offered for sale,” which raises the prospect that every single item in the store for which there is a digital coupon available, must have a shelf tag stating as much.
“I’m afraid the more that you regulate and put restrictions on supermarkets, the more we’re going to see them fail and leave our community. Why not just strike up a conversation with them and find out how it could be a win-win situation instead of playing the bully,” one local resident said in response to Elo-Rivera’s measure. “Every time you make legislation you make the price of things go up. Every time.”
“The idea that grocery stores are ‘weaponizing coupons’ and that requiring them to offer digital discounts in person at the checkout stand is a solution to California’s cost-of-living crisis is beyond absurd,” another citizen commented. “Digital coupons exist because they are an efficient way for companies to manage discounts and for customers to take advantage of them. If someone doesn’t have a smartphone or internet access, that’s a discussion worth having, but forcing grocery stores to accommodate every possible scenario at the register is overkill.”
Even a supporter of the measure acknowledged that there might be additional ways to address the digital divide. The Policy and Innovation Center, a San Diego-based think tank, pointed out that digital discounts “pose equity concerns, particularly for seniors and low-income San Diegans who lack smartphone access or reliable internet service.” 14% of low-income seniors in the city do not own a smartphone, and 12% do not have internet access at home, the group noted, compared to 95% of city residents who do. The ordinance will help bridge this divide, but more can be done, the group said. “Expanding access to digital literacy programs will be one of the most critical and lasting strategies for addressing digital equity concerns — both within the grocery sector and beyond.”
A number of grocery chains have offered their own solutions to the digital divide. Some have installed coupon kiosks which will allow those without internet access to load digital coupons or activate digital deals in the store. Others say they will honor advertised digital discounts upon request at customer service or at the register.
But San Diego’s measure would make addressing the digital divide mandatory. The proposal’s cosponsor, Democratic councilmember Marni von Wilpert, welcomed further input from industry voices in the weeks leading up to the second reading, and she offered to extend the window of implementation from 30 to 90 days, which “will give the grocery industry plenty of time” to raise any concerns, suggest ways to modify the measure’s language, and – assuming it is ultimately adopted – to comply.
And if the measure does officially become law, it’s a sure bet other communities and state legislatures will be watching closely to see how it turns out.
“We talk about San Diego being America’s finest city,” Elo-Rivera said. “This is an opportunity to be America’s fairest city when it comes to grocery prices.”
That’s his hope. The next few weeks and months may determine if his effort turns out to be a lifeline for digitally-disconnected shoppers – or a well-intended misstep that impacts everyone else.
Image source: Pavilions
