Groupon Blamed For Demise Of DFW Small Businesses

NORTH TEXAS (CBSDFW.COM) – Holiday shopping is expected to peak this week with Black Friday, but many North Texas businesses may not benefit.

Some small employers say they are being driven out of business because of Groupon — the popular email, deal-of-the-day discount company.

Whether it’s a haircut, massage or manicure, cost-conscious customers can find discounts galore on Groupon.

“For me, its a case of trying somebody new,” explained local Groupon user Georgette Doukas.

Groupon is a purchased coupon deal that becomes available if a select number of people sign up to buy.

But salon owners like Debra Pak say they lose money and rarely see customers return for full-price service.

The Shear Heaven Salon owner said, “Most of the customers are looking for the next best deal.”

Pak took a loss by offering half-off expensive hair treatments, for 130 people, through Groupon. She had hoped the venture would attract new clients, but despite good reviews only 10 returned for future services.

“It’s killing small businesses like me,” Pak said.

Some local businesses, like Grand Spa in north Dallas, have turned their back on Groupon and instead are offering customer appreciation weeks and other promotions. The move accomplishes two things – offers ‘rewards’ for regular clientele and brings in new clients with the discount price lure.

“Those customers [Groupon] are not loyal customers, they follow the discount and we want customers who are going to come back week-after-week,” explained Grand Spa co-owner Stacey Maness.

But many business owners admit, with the growing popularity of Groupon, it also hurts them not to participate.

“If I stop and other salons keep doing then it I’m going to be kind of lost in the shuffle,” said Pak.

The owner of a former sub shop in north Dallas blames the demands of Groupon for the store’s demise, a few months ago.

Pak plans to take her concerns to others in her industry through a blog or on Facebook. She wants to try and create standards before its too late.

“We are losing money and I know I’m not the only salon that loses money by doing this [Groupon],” proclaimed Pak.

CBS 11 News left phone and email messages for Groupon, but the messages were not returned.

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  • Rick

    Small businesses should look at the big picture.
    Marketing efforts always come with an expense. Without the numbers to analyze, we must look at units, or per client transaction to determine if the Groupon campaign was a success. And measuring success is up to each business owner.

    Ten new clients represents nearly 8% success. How often they return and the profit margin per service will give the break even of the program. Is it three cuts or 4 cuts?

    I have been with the same stylist for 25 years and would not take a groupon offer for that service. But, if Pak ended up with ten new loyal, returning clients, I would think it was a huge success.

    • Miniver

      i agree, Rick. Plus, she needs to look at the time lapse between the offer and her analysis. The article does not mention when she offered her discount; it may be premature for her to write it off as a loss. Another aspect for small businesses like hers to consider is salesmanship while servicing the new clients. If she treated them as an inconvenience because she felt she was losing money on them, then you can’t blame them for not coming back. Even if she had been hospitable, she should have realized that she needed to step up her game and “sell” her salon as she serviced these new clients. Make them want to come baclk by listening to their needs and then educating them on how your salon will excel at meeting those needs.

  • kd

    My daughter-in-law went to a hair salon and had a service done using a Groupon. She will not return to that particular salon because of the poor service she received. I’m sure that is one of the reasons this happens, not just because a Groupon was utilized that particular time.

  • gw

    I used a groupon for a salon in Ft Worth. The stylist did a good job but barely spoke to me and I felt like he resented the fact that I used a groupon. I am willing to pay regular price for the next visit if I like the stylist. When he was finished with my hair he just said “finished” and walked off. I could only account for his standoffish behavior for the fact that I used a groupon.

  • Fast Penny Cars

    If you really want to help small business to compete with big corporations they must teach small business, how to build up their business credit profiles. This is the KEY to helping any business getting funded. Here.

  • Local Business Merchant

    There is a new Local company that has taken the concept and intention that Groupon and other sites like them started with and went back to actually using the concept to help Local Businesses generate new loyal customers. actually focuses on building promotions that are more inline with what the business needs to stimulate their customer growth not just create a bunch of coupon users. They spend the time needed with the business Face-To-Face to identify their needs and what type of immediate traffic they can sustain without negatively impacting the Local Businesses chance at the first impression. They may be new and their Local subscriber list is only in the thousands, but everyone starts somewhere. I have talked with a few of the businesses that have run deals with them and their experience was very good. The businesses stated that the focus was always on the Business growth and the Customer Experience not how many Coupons could be sold. Do your own research. Maybe it’s time Local Businesses went back to using Local Businesses to help build their Local Customer traffic and keep some of the advertising money spent by businesses in the Local Communities…..

  • Cause and Effect meets Profit and Loss | Betty Kincaid

    […] “We are still working to make up the lost money and will not be doing this again.” Instead of blaming Groupon, let’s look at what went […]

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