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Why do stores honor competitors' coupons?

Couponing seems simple enough -- until you take a closer look. Shoppers learning to Super-Coupon come up with all kinds of questions. Here's a good one:

Q: "Your column explaining how stores are reimbursed for coupons made me think about whether or not I should use one store's coupon at a competing store down the street. For example, I received a coupon good for a $5 discount on a $30 grocery purchase at Store A in my area, but I used it at Store B, since they will honor it. But don't both stores lose in this case? I can't see Store A reimbursing Store B for this coupon. And I can't see Store B even bothering to submit the coupon to Store A. How does this work?"

A: Many store coupon policies contain provisions for handling a competitor's coupons. You're certainly not the only one to wonder exactly what happens when you redeem one store's coupon at another store.

Your store-issued "$5 off $30" coupon is different from a manufacturer's coupon. Coupons are always labeled at the top, either "Store Coupon" or "Manufacturer Coupon." When shoppers use a manufacturer coupon, the manufacturer of that particular product reimburses the store for the full face value of the coupon, plus a few additional cents to cover the coupon-processing costs.

Stores cover the cost of their store-issued coupons. Whether the store issues its own coupon for $1 off an item or $5 off your entire shopping purchase, no one reimburses the store when that coupon is used. The store eats the cost, absorbing the coupon's discount as an incentive to draw in customers. Coupons like these are considered a cost of doing business and the stores budget accordingly, just as they do for advertising or other expenses.

Many stores will honor a competitor's coupon even when they receive no reimbursement. Why? They want to keep our business. Rather than lose a sale to a competitor across town, they honor the other store's coupon.

They may "lose" $5 on a single transaction but they also ensured that you purchased quite a few of your groceries at their store, which the store made a profit on. They lost a little to retain your business today and possibly in the future. Shopper loyalty is very important to any store.

Many stores actually contain a provision for accepting other stores' coupons in their coupon policy. It's important to be aware that these policies are tools we should all be familiar with, as they contain a lot of valuable information about how the store handles situations exactly like yours.

Here's an example taken directly from a national chain's coupon policy:

"Store A will redeem competitor house brand coupons on comparable Store A house brand merchandise purchased at the face value of the coupon within the valid dates of that coupon. For example, a 50-cent coupon for Store B brand loaf of bread may be redeemed when a loaf of Store A bread is purchased. Customers may choose between offers (Store A or competitor) to receive the best price as long as the value of the product is not exceeded."

In this case, if I have a 50-cent coupon for another store's house brand of bread, this store will accept the coupon, even though they will not be reimbursed for it. My store will accept it because it's an incentive to shop there and it doesn't want to lose my business over a 50-cent discount. My store knows that I likely will be buying additional items in the same trip.

Many readers tell me that they had no idea their local stores accepted competitors' coupons until they asked for a copy of the store's coupon policy. If you learn that yours does, scanning the available store coupons for other stores in your area just may help you get additional savings, without actually going to the store that issued that coupon.

Jill Cataldo, a coupon-workshop instructor, writer and mother of three, never passes up a good deal. Learn more about couponing at her web site, www.super-couponing.com. E-mail your couponing coups and questions to jill@ctwfeatures.com.