Groupon IPO Is Hot, But Are the Deals?

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Groupon is responsible, he thinks, for "a very big shift in philosophy" on the part of retailers—and not a shift for the better: "Until the last few years, the objective for retailers was to create an exceptional experience for your customers, so that you'd win their loyalty. Now it's all about just getting first-time people in the door by giving away the store--with no guarantee they'll come back."

As for customer complaints, he says they typically result from a promotion's succeeding too well: A regular customer of a local spa, say, will show up one day to discover she can't get in the door: the place is crammed with coupon-clutchers. Or, having bought a coupon herself for some promotion, she arrives at the retailer to discover the entire supply of the discounted item sold out hours ago.

Complaints about Groupon aren't any different, he says, from those directed at competitors. He cites, for example, a recent incident in Toronto where a different coupon seller caused havoc at a local butcher who was offering $175 worth of meat for only $55. "Customers said that by the time they got to the store, all that was left was chicken." Blogged one angry coupon-holder: "I don't even know where to begin. The coupons were not honored."

How about the deals themselves? Are Groupon's as juicy they were a year ago? Yes, says Phibbs, assuming you can fight your way through the door. "They're still as good. You still get $50 of Thai food for $25."

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