Groupon deals

Chicago-based Groupon, which disclosed plans to hold an initial public offering last week, has been looking at new industries where it can apply its group-buying model in a large-scale way. Recent efforts include national partnerships with Live Nation and Expedia to sell discounted tickets and travel offers.

Groupon has offered deals for grocers in the past. Last year, it offered a discount for upscale market Fox & Obel in Chicago. But the new partnership with Springfield, Mass.-based Big Y is the first time a multi-store grocery retailer has run a Groupon deal. Big Y operates 61 stores in Connecticut and Massachusetts. In addition, Big Y is the only retailer in any industry that has fully integrated Groupon deals into its loyalty card program.

The first CPG Groupon deal with General Mills in San Francisco and Minneapolis involved shipping a basket of products direct to consumers. That requires bypassing traditional retailers -- a proposition that could rankle CPG players' main distributors -- and a marketer with a broad enough assortment of brands to get consumers to buy a lot of products at once, $40 worth in General Mills' case.

Groupon is working on the project with HaloEffect, a Boston marketing firm that has served as a consultant to the company since 2009, and Incentive Targeting, a Cambridge, Mass.-based promotion analytics and software firm.

U.S. consumers spend $550 billion annually on groceries, and CPG companies spend $35 billion annually on marketing and promotion, said Tom Schneider, president of HaloEffect in a statement, adding that he sees the partnership "having the potential to revolutionize the grocery-marketing landscape."

Other retailers and packaged-goods companies are expected to participate in similar deals in the weeks ahead, said Ben Sprecher, VP-marketing of Incentive Targeting, who said using loyalty cards as a fulfillment mechanism solves a host of problems that prevented use of Groupons at supermarkets or by most CPG players up to now.

Using supermarket loyalty programs eliminates the fraud concerns that have kept some big CPG players like Procter & Gamble Co. from using print-at-home internet-distributed coupons, Mr. Sprecher said, and required approval from a manger for redemption of other high-value coupons at supermarkets in the past.

Using loyalty data also will allow supermarkets and CPG brands to answer another key question that has dogged Groupon in other sectors of its business -- whether these deep-discount deals really pay out in the long run, Mr. Sprecher said.

The retailers, and, provided they're given access to the data, CPG brands, will be able to see how shoppers' prior purchase patterns were altered after using the Groupon.