RED Hearts: The Evils Of Groupon

RED Hearts are guests posts on I Heart Daily from the authors of RED: Teenage girls in America write on what fires up their lives today. Today’s RED Hearts post is from Zoe Mendelson, 21, in NYC, who explains the downsides of Groupon:

“This is a time when EVERYONE is looking for a deal because money is tight,” said Carol Wallak, owner of Sola, an inventive and welcoming (the Hawaiian Islands meet the Midwest) restaurant in Chicago. “We’re in a neighborhood of families, and to keep their business regularly, it seems offering a deal is what attracts them.”

Yes, we like bargains. We’re the first Groupon generation, presented with daily-deal mania in the midst of an economy in which we can’t deal daily.

But we have to think about what we are willing to sacrifice in the long-term for a one-off freebie.

In this challenging climate, we still have a choice about where and how to spend our money -- and a chance to consider what constitutes a steal, and at whose expense? While we scrutinize the authenticity of political representation so harshly, our dollars are likely our strongest votes.

And small businesses need our votes, not our coupons. This is why I love the idea of cash mobs. Here’s how it works: A bunch of people organize in advance, show up at a local business at the same time, and spend their money -- usually about $20. That’s it. No bargains. Just good old-fashioned community supporting community. It’s so beautifully simple it almost seems subversive. Since the movement started last August, there have been more then 100 cash mobs around the country.

This rush of consumer power puts the cash into -- rather than taking away from -- the neighborhood restaurants and shops that in these times hurt badly. Even before the economy collapsed in 2008, small businesses in the U.S. had an average lifespan of 8.5 years, according to the Small Business Desk Reference. Forbes reports that in 2007 only 44 percent of small businesses made it past four years.

Of course, the picture looks much bleaker now. Tight wallets tend to steer shoppers to more actively seek bargains, embracing the in-box coupon rush or choosing megastores like Target and Walmart -- who can afford to discount for the sheer quantity of product they move. This article does a great job explaining why what may appear great for consumers is often damaging to small businesses. Groupon essentially functions like a very expensive loan for them; it does not usually pan out well.

The more we can support small businesses, the more of them we can keep open, the more choice we have as to where we spend our dollars, the more political voice we have. Now this is saving, in the truest sense.

RED Hearts guest poster Zoe Mendelson is an author of RED: Teenage girls in America write on what fires up their lives today, which is out in paperback.