No. 5: Extreme Couponing

If the daily discounts that flooded our inboxes have demonstrated anything, it’s that frugality has become more than a recession watchword. In 2011 frugality was a way of life, even a calling for some.

Indeed, the recession that started in 2008 brought with it a culture of frugality. You may have heard of “austerity chic” or the catchphrase “cheap is the new black”; these ideas promised to stick around beyond the current economic slump. The country’s recent thriftiness transformed traditional penny-pinching — say, clipping a few coupons from the Sunday newspaper — into extreme sport.

After a brief lull, coupon redemption was up 4% in the second quarter of 2011 compared with the same period in 2010, according to Inmar, a company that processes coupon transactions.

The reality show “Extreme Couponing” on TLC followed serious shoppers as they combined store sales, manufacturers’ coupons, and rebates to whittle down grocery bills to almost nothing.

Scouring circulars and printing out online coupons meant financial survival for some. For others, though, the quest to save a few bucks at the cash register morphed into obsession, raising the question of whether these extreme couponers were just hoarders disguised as savvy budget-seekers. Katherine, a super-couponer featured in one episode of the show, amassed a $30,000 stockpile that included 200 boxes of pasta, 60 boxes of tissues, and her most “prized possession”: 400 rolls of paper towels.

The show spawned its own mini industry. Dozens of websites allowed users to share deals, post coupons, and show off snapshots of their abundant pantries. Master couponers like the Krazy Coupon Lady taught the masses how to save like pros. There were how-to books and even classes (one $19.99 70-minute DVD promised to teach you how to cut your grocery bill by 50-70%).

The fad even drew some reality-TV star-power as single mom Kate Gosselin began blogging about her coupon experiences on in November.

Whether anyone can make a profit from discounts is still an open question. Groupon, the daily deal juggernaut (40% off on laser-hair removal, anyone?), was certainly trying. But the flaws in its business model were no secret;  one of them is how they could afford to grow so big so fast.

Groupon had its much anticipated IPO on November 4, with a $12.7 billion valuation, down from an earlier $20 billion valuation. Still, plenty have been trying to get in on the action. Facebook launched its own Deals site in five cities in the spring, but scrapped it after just four months, while user-review site Yelp scaled back its deal service in August.

All of which might mean that deal fever is wearing a bit thin. A Forrester report found that 29% of subscribers to coupon and flash-sale sites have unsubscribed because they don’t want to receive so many emails. And more than half the people who redeem their deals say they would have purchased without the voucher.

Regardless of whether bargain-junkies are OD-ing on deals, some merchants certainly are getting sick of the trend. The Kroger supermarket chain, for example, rolled out a new coupon policy at some of its stores as a way to cut down on those shelf-clearing shoppers armed with sackfuls of coupons. Krogers now limits shoppers to five coupons for the same product and to one manufacturer’s coupon per item. And no more double couponing.

Lisa Scherzer is producer and editor at Yahoo! Finance, focusing on personal finance. Before Yahoo!, she was a writer and copy editor at Scherzer once used a Groupon for yoga classes.