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06 July 2008 @ 06:13 pm
Opinions, please?  
So Kroger is doing a promotion where if you buy store gift cards in the amount of $300, $600, or $1200, they will add 10% to the value. I'm sure there's a catch somewhere (besides the obvious one of having to have that much money up front).

Dale says there's no catch; you buy the card, they tack on the bonus.

I'm less trustful.

Your thoughts?
 
 
 
Curious Stuffonelargecat on July 6th, 2008 10:28 pm (UTC)
I don't think there's necessarily a catch. I think their hope is that once you've spent the money up front, you'll "forget" about it, basically, and when you're shopping you won't be as careful about your budget or how much this cart is going to cost because you're just going to pay for it with the card, which is money already spent, which makes it *feel* free. So maybe they are hoping that where you normally would be fairly frugal, you'll throw caution to the wind and buy more or buy things not on sale or whatever.

I don't know...that's what comes to my mind first, anyway. :)
Janet Miles, CAP-OMjanetmiles on July 6th, 2008 10:36 pm (UTC)
That kind of goes with my thought that they figure on some percent of buyers losing or forgetting about the card.
Shadow/Brookekengr on July 9th, 2008 04:50 am (UTC)
Plus, *they* get the interest on the money while it waits to be spent. That adds up a lot at the rates they can get.

It's practically an interest free loan for them.
Jim Hetleyjhetley on July 6th, 2008 10:37 pm (UTC)
Shaws supermarkets and, I believe, some of the big chain department stores, such as Sears, are doing the same thing. It's tied into the "economic stimulus" Federal smoke-and-mirrors (in which I send them my estimated tax checks and they send me a rebate check, but I digress...)

Tying you down to spending that money _with them_ is worth the 10% off their markup. Plus, they figure you'll end up spending more than you might otherwise.
stonetalkerstonetalker on July 6th, 2008 11:02 pm (UTC)
Smoke and Mirrors
I agree... same smoke and mirrors as the 'interest free' credit card offers.
Johnjohnpalmer on July 6th, 2008 10:56 pm (UTC)
Well, some portion of that is easy to deal with. Money-now is always worth more than money-later. (As the old joke goes, "if you don't agree, give me all your money now, and I'll return it in a year".) Also, no matter what, they have 3, 6, or 1200 of your money, and the card is often a bearer certificate (i.e.: lose it, you might as well have lost cash). And, one thing that people who had Sharper Image cards learned, it's unsecured debt... in bankruptcy, it goes bye-bye.

The rest is probably hopes you'll make more trips to Kroger, and get into the habit of going there every single time you need food.
Janet Miles, CAP-OMjanetmiles on July 7th, 2008 12:15 am (UTC)
We already do all our grocery shopping at Kroger (since Dale works there, it's convenient), so that's not an issue.

I'd forgotten about the whole future value / present value aspect. They're earning interest on everything we haven't spent yet, as opposed to us earning interest on what we haven't spent yet. On the gripping hand, I don't get 10% interest on anything, so the opportunity cost isn't significant for me.

Cool; thanks for the explanation.
stonetalkerstonetalker on July 6th, 2008 11:01 pm (UTC)
Kroger
I think it is to entice you to spend with 'them' as opposed to one of their competitors. Once you've given them the money, they don't care whether the stock leaves the store or not; you've already paid for it. It's a win win situation, because they've got your money AND they've still got stock on their shelves, even if it is only for a short time.
Janet Miles, CAP-OMjanetmiles on July 7th, 2008 12:16 am (UTC)
Re: Kroger
One way for us to "win" would be to turn around and spend it immediately on non-perishables, I suppose.
just the gurl you want: opinatedgirlgoyle on July 7th, 2008 12:53 am (UTC)
the catch is they get your money now and you get a card. Granted you could buy it turn around and spend $1320/$660 / $330 right this second but your average person won't. And you can only spend this "money" at Kroger.


They are also hooping that the average person will forget to use the card in which case they can deduct a certain % of the amount in fees. The card expires in a given amount of time and is not exchangeable for cash


Its a win win for Kroger.

Its also a tie in with the Government incentive check, thus the predesignated amounts.

Lesliemamatiger on July 7th, 2008 10:49 am (UTC)
According to the FAQ, Kroger gift cards don't expire. It doesn't say anything about deducting fees, either. (Simon Mall gift cards, on the other hand, do expire and do deduct "maintenance" fees each month after a certain time. GIS "simon mall gift card ripoff.")
Michaelcuriousangel on July 7th, 2008 02:42 am (UTC)
Having worked grocery front end management for longer than I care to think about, I feel eminently qualified to address this one. :)

Everyone has pretty much already covered the big reasons -- "loss leader" to get your butt through their door instead of some other store, potential gain from non-redeemed cards, future value vs. present value. The only other one I'd add is that it does make some parts of the balance sheet look better for a given period; while you still have a liability out there for "Unredeemed Gift Cards" (which can be discounted by some percentage based on past experience for what doesn't get redeemed), you also have an asset on the books Right Now in cash received, which makes the cash-flow statement look a little better, and when sales are slumping, every little bit helps. It's also a PR bonus, especially if you're counting on some governmental body to approve your zoning variance for a new store someplace -- everyone likes helping out someone who is helping out the community, after all.

I'm guessing that there will be some degree of purchase-tracking as well, to see if people who might not otherwise sign up for a loyalty card program will do this. Since the gift card can probably be traced back to a credit card or a loyalty card some where in there, they also want to know if you're spending it on different things, or if you're giving it to someone who will spend it on things that are different than the profile of what you usually buy there.
Traveller Bluestraveller_blues on July 7th, 2008 10:38 pm (UTC)
IMHO, it's the spreadsheet...
...bottom line is that any cards they sell now go into the 'Accounts Receivable' and are credited as Profits Now, so that they can show money in the bank. With the way the economy is tanking, it is Vurra Important for any given business of retail-like style to show quarter over quarter and year over year consistency at worst and improvement at best. With the way that groceries in particular are skyrocketing, the pre-paid cards are a lock-in boost to insure this quarter will be good for them at least.

Most stores can take a 10% hit at the register because people don't just buy stuff on sale -- they buy non-sale stuff too, and only really smart shoppers can get more than 7% on the sale items stuff compared to their total bill.

-Trav

(Anonymous) on July 8th, 2008 12:30 am (UTC)
The only thing about gift the idea is a use fee when you buy something.
I don't know if kroger is charging a card use fee or not, but that would be my big question to ask.

Younger Brother
Janet Miles, CAP-OMjanetmiles on July 8th, 2008 01:56 am (UTC)
I'm pretty sure they don't, but I'll check the fine print before I leap.
Miche: battle sporksmicheinnz on July 8th, 2008 05:01 am (UTC)
I'd only be concerned if they expected you to use it all at once. And if they did so (which is pretty unlikely), it's cans all the way, baybee. And massive freezer restock.