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Sunday, August 03, 2008

Kroger Gift Card Promo is NOT a "Deal"

From a marketing standpoint, the promotion is brilliant. Whoever thought of it should be promoted. But from a thinking customer's standpoint, it's a stinker.

Recently, Kroger started a promotion to sell their gift cards. Rather than promoting them for people to give as gifts, the promotional idea was for shoppers to buy a gift card for their own use - essentially pre-paying for groceries.

If a person bought a $300 card, it would be worth $330, if you bought a $600 card, it would be worth $660, and so on. It really sounded like a good idea to me - if you consider there are 6 people to feed in my house! It would translate to 10% savings.

You know I love a deal, so I was extremely tempted by this bait. I never bought one, though. Something about it bugged me. I don't like being 'locked in' to one store. I like to let Publix and Kroger duke it out for my money. So, I decided to watch and observe, and consider taking Kroger up on it the next time around.

I have watched the weekly sales ads for both Kroger and Publix for the last few weeks, and I have noticed that since the gift card promotion, Kroger hasn't had as many good deals. They have tried to have the appearance of really good deals, with "10 for $10" sales and now a .58 Cent sale. Neither of these sales are what they appear to be. Of the usually 10 things offered in these "sales," only 2-3 of the items offered are truly good deals. You really need to stay aware of what the prices are normally, to know if you are getting a good deal or not.

I am disappointed in Kroger, because they have gotten people to prepay for their groceries, and they aren't offering truly excellent deals because they know they have people locked in to buy from Kroger.

So I think that what is really happening is that although a person thinks they are getting $30 of "free" groceries when they bought their Kroger gift card, if the prices are generally higher than normal, then a shopper hasn't really "saved" anything. We also rationalize in our minds that we have $30 or more of 'free groceries' because we bought the gift card. This usually causes a shopper to spend more. A gift card also feels less painful than paying cash, so again, it's easy to spend more.

Pre-paying for a grocery card can help someone stay within their grocery budget, but I don't believe it's the way to get the best deal.