Money Express: Money saving deals have got us spending

Saving money has become as synonymous with the post Celtic Tiger Ireland and spending it was during the mad, bad decade.

Saving money has become as synonymous with the post Celtic Tiger Ireland and spending it was during the mad, bad decade.

Money Express with Jill Kerby

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You can try and do it the conventional way – putting aside surplus income, or cutting down on your usual expenditure, or by working overtime or getting another job and saving that (heavily taxed) extra money.

But since few of those options are easily come by now, many more of us are resorting to slightly less conventional ways of saving, and it involves a whole new industry that has sprung up in recent years: on-line discount vouchers and special deals that can provide huge once-off reductions on practically every retail opportunity you can image.

We’re all familiar with grocery store cards that give you a cent or two of credit with every euro purchase you make. They’ve been around for many years and you can convert these savings into other goods by other suppliers than the grocer, or they’ll let you reduce your next food bill by the cash “points” that has built up. Like my mother before me, who used to get little pink stamps to lick and put into her grocery store booklet, I try to save up my points for expensive food shopping weeks at Christmas or Easter.

A few years ago, the voucher market took an interesting turn – and it’s all down to the growth of the internet and our increasing comfort in shopping on-line.

Voucher code or ‘daily deal’ companies started springing up (starting in the USA) acting as advertising agents and promoters for retailers and service companies willing to give huge cost discounts to anyone who was willing to pay up-front for a restaurant meal, hotel accommodation, beauty and health treatments, entertainment events. The retailer sees very, very little of this money since it is the discount agent who enjoys the biggest return, but most (who stick with the campaign) say it is the equivalent cost of advertising in the conventional media and worth it if the buyer returns and pays full price in the future.

In Ireland, the best known voucher code companies include the likes of GroupOn.ie, LivingSocial.ie, Pigsback.com and many others.

Last week some interesting data was produced by MyDealpage.ie, a company that allows users to coordinate all the daily deal sites that they subscribe to by receiving just one e-mail (I intend to sign up for this and declutter my inbox).

It found that over the past six months, Irish consumers were spending an average of €150,000 a day on these sites or about €27 million so far this year, with the accommodation (23%), health and beauty items or services (21%) the two biggest categories of choice. The “savings” to consumers has amounted to €46 million, says MyDealpage.ie, which monitors all deals and spending and it should top €100 million by year end.

The average saving per purchase is 51% of the actual retail and when I logged on I discovered I could get my teeth whitened, my dog vaccinated, book French language lessons and stay in any number of hotels for a night with dinner for the price of what would have normally been the cost of that hotel room.)

Critics of the new discount deals say this represents a €100 million loss to the retail trade with the profits going to the mainly foreign owned deal sites, but that isn’t the total story.

This new industry is encouraging people to spend what they otherwise would be only saving and many will give the retailed their return custom at the full price.

What I believe is the downside of these tempting deals is that not everyone reads the terms and conditions. That said, the use of these daily deal sites means that slowly but surely, more of our €3.7 billion worth of spending on-line will eventually translate into more knock-on sales that stay in the country. Retailers get a new source of advertising and promotion and benefit from the word of mouth advertising if the buyer is happy with the special, once-off deal.

Smart shoppers, with lots of time to watch the deals as they appear, can plan how much they’ll spend a year.