Investigating Groupon’s Effect on Local Communities

Love LocalAt Groupon, we love small, local businesses, and we make it our goal to support them as part of our business model. Our hope is that connecting consumers with local merchants in their own neighborhoods benefits local communities and economies, but we couldn’t be sure until we did some more digging.

To begin to answer these questions, the Social Innovation team at Groupon undertook two research projects this past fall:

  1. The first was to determine whether a dollar spent at Groupon on an independent business generated more economic activity than a dollar spent at a chain business directly.

  2. The second question was how does Groupon shift consumer behaviors.

The clear answer to question #1 was…yes! During a 12 week period in Q3, 2013 in three markets (Chicago, Atlanta, St. Louis), Groupon created 48 jobs and $4 million in economic activity that would not have existed had the money spent at Groupon been spent directly at chains.

While that result alone might seem to answer the larger question—does Groupon positively impact entire communities—we still needed more information to draw a conclusion.  The reason is, while spending a dollar at Groupon is better for the local economy than spending it directly at a chain, it is still not as good for that local community as spending it directly at a local, independently owned merchant.

So then we needed to answer the following question: Is Groupon changing consumer behavior in such a way that dollars that would have been spent at chains are now spent at independent merchants via Groupon? To begin to answer that bigger question, we asked our Groupon consumers how they feel about local and independent businesses and how they use Groupon to discover them.

What the Social Innovation team found while working with Groupon’s Market Research team was that approximately ⅓ of Groupon consumers believe that supporting local independent businesses is important and that 50% of Groupon’s consumers use Groupon to discover local businesses.

More research needs to be done to empirically prove that Groupon positively affects local communities, but it is clear from our initial research that Groupon plays a role in supporting the local business community—something we are proud of!