Groupon, Community Developers, Seek Common Ground
Despite a fledgling retail corridor along Cottage Grove Avenue in Chicago’s Quad Communities, recent studies show that Quad residents spend about two out of every three of their dollars outside the neighborhood. That’s good news for local area businesses facing prolonged economic stagnation and sluggish sales growth – if they can attract those residents to shop locally. Harnessing local purchasing power is critical to maintaining their businesses.
Alex Leichtman, Groupon's head of merchant operations, emphasized that in addition to being a daily deal provider, the company can provide significant demographic data that will allow merchants to better understand their businesses.
Photos by Gordon Walek
Ditto for small businesses throughout Chicago -- from North Lawndale and Pilsen to Uptown and Back of the Yards. To address that issue, LISC Chicago this summer arranged a meeting among representatives from Groupon’s Grassroots program and community and economic developers from more than 20 Chicago neighborhoods to discuss how to encourage residents to shop and buy locally and create thriving neighborhood economies.
For Groupon, the Chicago-based online daily deal purveyor, the meeting (part of LISC Chicago’s Brown Bag Luncheon Series) was an opportunity to display its wares to economic development specialists in neighborhoods where it doesn’t currently have a significant presence. For the community group representatives, it was a chance to learn about new Groupon services that might be of interest to local businesses.
The Groupon lure
Patty Huber, head of Groupon’s Grassroots program, stressed the dynamic evolution and expansion of Groupon’s work—from its early days as a strictly daily deal provider to the company’s increasing emphasis on empowering local merchants and small businesses—and the company’s core belief in the “virtuous cycle”: If Groupon invests in and supports the local merchant community, and the community thrives, grows, and uses the company’s products as a result, those businesses will continue to use Groupon in the future.
“People typically think of Groupon as just a daily deal provider,” said Huber. “But if you look closely at the work we’re doing, you’ll see that we’re really here to look out for the well being of the little guy: the small businesses and independent merchants who make up the bulk of our merchants. We’re here to level the playing field, and working to build tools and products and making investments to support these groups.”
“What we care about at Groupon is making products that are valuable to you and useful to you,” added Alex Leichtman, Groupon’s head of merchant operations. “Moving forward, we want to commit to supporting the health of the local merchant community overall, partner with organizations that support local merchant health, and educate users and the public about the positive impact of buying local.”
To that end, Huber shared with community representatives Groupon’s expanding range of services, including an online merchant center where businesses that run Groupon deals can privately access customer feedback and helpful demographic data on purchasers of a business’ Groupon.
“It’s really a great tool for businesses,” said Huber. “When a customer goes to your business we provide them with a survey on their experience. We get a 40 percent return, and it’s all private, so this is information only the business owner can access. It helps businesses understand and expand their range of customers and improve their products.”
If Groupon expects to make inroads in multi-ethnic and multi-language communities, it will have to pay its dues by participating in neighborhood functions, such as street festivals and other ceremonies, said Roger Sosa, business recruitment manager at Back of the Yards Neighborhood Council.
What neighborhood businesses need
Roger Sosa, the business recruitment manager at the Back of the Yards Neighborhood Council, echoed the concerns of many of the community representatives when he asked whether Groupon was equipped to accommodate the small, mom-and-pop cash-only stores that do business in his community.
“Many of us deal with multi-ethnic and multi-language communities,” he said, “and a lot of merchants are first generation merchants that deal in cash, and that prevents them from knowing much about their customer demographic. One of our goals and responsibilities is to get them back on the radar, get them to accept credit cards and expand to the Internet. We want that business owner to be able to sell that business or pull the value out of the business, otherwise it’s going to be just another empty storefront, and I’m not sure Groupon can reach those kinds of owners until that happens.”
Melinda Kelly, executive director of the Chatham Business Association, added that businesses in her community would need to better understand the economics of a Groupon deal in order to embrace the company.
“Our organization, to represent this as a good product, we’d have to see that it is a product that continually works for our businesses,” she said. “And you need to be there to respond to the needs and concerns of businesses trying to utilize your services.”
Groupon's Lauren Uyeshiro says the company is looking for new ways to engage merchants who may not be familiar with the service.
Lauren Uyeshiro, Groupon’s summer MBA intern, acknowledged that concern and pointed towards the company’s expanding range of products that might assist such businesses. “Some of our tools might accommodate businesses like that, and I think we’re working to develop a point of sales system—Breadcumb—to address that, and really a whole ecosystem of products that could accommodate these businesses.”
“It’s an issue of scale,” added Huber. “Groupon’s been evolving over the course of the last three years. One thing to note is Groupon Now, which allows you to choose how many deals you want to sell on any given day, and this is a great tool for small businesses. We now have technology that we’re building in that allows us to meter things out and work with a much wider variety of merchants. Our sales team is working on ways to make collaboration with small businesses cost effective for both sides.”
Melinda Kelly, president of the Chatham Business Association, said businesses in her neighborhood will need to better understand the benefits of a Groupon deal before embracing the company.
Getting businesses up to speed
The community development representatives also recognized the work they needed to do in their own neighborhoods to equip local businesses with the tools to capitalize on the benefits of Groupon.
“Education is really a big piece here,” said Ulises Zatarain, The Resurrection Project’s New Communities program director. “A lot of businesses in Back of the Yards or Little Village or Pilsen, we need to do a lot of work to engage them, train them, teach them to use Internet, and get them to lose their fear of connecting. All that takes a lot of time and a lot of resources, and I think that’s the best way to get these businesses up to speed. Only when we start from ground zero to get these businesses to embrace technology will something like Groupon work.”
Despite the ground-level work that remains to be done to get many small businesses Groupon-ready, the community developers on hand saw an exciting opportunity for both Groupon and the businesses in their communities.
“These South Chicago communities spend billions of dollars, and you have a wonderful opportunity to grow as an acorn and get some credibility in the black and Hispanic communities on the South and West side,” said Mellini Monique of Herby Living, Inc. “All these brands that are competitors of yours are seen as upper scale brands in the minds of the consumers, but if you engage with community groups and gain the trust of businesses, you have a huge opportunity.”
Patty Huber, head of Groupon's Grassroots program, with LISC staff and neighborhood business specialists.
That feeling was shared by Back of the Yards’ Roger Sosa. “Our community council hosts events every quarter, and we’ll bring out someone like Groupon and give you an audience of 50 or 60 businesses,” he said. "But," he cautioned, “you need to make a commitment to the community itself, be involved in community activities, at street fairs and community fairs. If you're going to put these programs out there, it's going to take a physical presence.”
And while Patty Huber, Groupon’s Grassroots program head, acknowledged that Groupon doesn’t yet have the resources for full immersion in all of Chicago’s communities, she did offer a hopeful vision for the future.
“What we want the Groupon effect to be five years from now is impacting local merchants everywhere, not just the North Side of Chicago. We want it to be an aspirational vision whereby merchants see Groupon establishing relationships with local merchants, see its benefits, and embrace it to create more resilient businesses and stronger, more vibrant communities.”
Subsequent meetings of LISC Chicago’s Brown-Bag Luncheon series are on the second Fridays of September, November, and January from noon to 1:30 p.m. at 135 S. LaSalle St. on the 22nd floor. For more information about future brown-bags and to RSVP to the events, contact Maria Hernandez at firstname.lastname@example.org, or 312-422-9567.
Posted in Economic Development, Back of the Yards, Pilsen