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CC SR 20251021 02 - Paper Coupons CITY COUNCIL MEETING DATE: 10/21/2025 AGENDA REPORT AGENDA HEADING: Regular Business AGENDA TITLE: Consider requiring local grocery stores to offer paper coupons as an alternative to digital- only promotions RECOMMENDED COUNCIL ACTION: 1) Direct staff to include the continued availability of paper coupons for all patrons as a legislative priority for the City’s 2026 Legislative Platform; and, 2) Direct staff to work with our State representatives to explore opportunities for introducing or supporting state legislation in 2026 on the continued availability of paper coupons throughout California. FISCAL IMPACT: The recommended City Council actions will not have a fiscal impact on the City’s budget nor require a funding appropriation. Amount Budgeted: N/A Additional Appropriation: N/A Account Number(s): N/A ORIGINATED BY: Irantzu Pujadas, Administrative Analyst IP REVIEWED BY: Catherine Jun, Deputy City Manager CJ APPROVED BY: Ara Mihranian, AICP, City Manager ATTACHED SUPPORTING DOCUMENTS: 1) City of San Diego, Ordinance No. 0-21946 (page A-1) BACKGROUND: Many grocery stores are increasingly offering digital coupons in lieu of paper coupons, which require customers to access them through smartphones applications or online accounts. While this shift towards digital coupons can streamline grocery operations, reduce the cost of printing and mailing paper coupons, and reduce a footprint on the environment, it presents concerns for those who may have limited access to smartphones, the internet, and/or digital literacy. 1 Reliance on digital coupons may be particularly impactful to a subset of residents, such as older adults, who may lack internet connectivity, digital literacy, or face other barriers that limit their access to digital coupons. The Pew Research Center reports that 25% of older adults lack internet connectivity, and 39% are without a mobile phone. This data point resonates in Rancho Palos Verdes, which has a relatively high percentage of older adults 65 years or older (27% to 30%), compared to the statewide average (16.2%). Furthermore, there are some households in Rancho Palos Verdes with language barriers or data privacy concerns that may limit their use of smartphone apps. Lastly, given the rise in inflation and food costs, facilitating access to coupons may be critical for these households. As such, on August 5, 2025, Mayor Pro Tem Seo requested staff bring back an item discussing the potential for a local ordinance or other measure that requires local grocers to offer paper coupons, in addition to digital ones. DISCUSSION: State legislatures in Illinois, New York, New Jersey and Massachusetts have introduced legislation that would either mandate paper coupon alternatives or require grocery stores to automatically apply digital discounts at checkouts. In addition, the City of Los Angeles, as of August 2025, began considering whether to implement similar measures and signed a resolution to research and consider such measures in the future. While the details vary, these proposals intend to facilitate consumer access to promotions and provide transparency in grocery pricing. California does not have a statewide law requiring paper coupons, but the City of San Diego is the first municipality in the United States to adopt an ordinance addressing this matter. The City of San Diego’s Grocery Pricing Transparency Ordinance (Attachment A) requires grocery stores that offer digital-only coupons or discounts to also make equivalent paper coupons or pricing available. Stores must also clearly label discounts and post signs informing customers about their rights to request physical coupons. After initial passage, the ordinance was later amended to provide more flexibility for grocers, who could provide in-store alternatives such as kiosks, barcode scanning, and cashier overrides, in lieu of paper coupons. Compliance requirements for grocery stores under the new San Diego ordinance include: • Display of the discount price in stores: The digital discount price must be clearly shown where goods are displayed or on each individual item offered for sale. • Display notice in stores demonstrating compliance with the ordinance : Grocery stores must post a sign or notice in a location visible to consumers (e.g, at the checkout). • Provide identical physical coupons to consumers upon request. Non-compliance with the ordinance may result in injunctive relief, consumer restitution, and/or civil penalties. 2 The ordinance has received support from various community organizations and groups such as AARP California, San Diego Senior Affairs Advisory Board, ElderHelp of San Diego, and the San Diego Digital Equity Coalition. However, g rocery industry representatives have expressed some opposition, citing the following concerns: 1. Operational burden: Many grocers argue that managing both digital and paper coupon systems increases complexity at checkout and requires additional staffing. 2. Cost: Printing and distributing paper coupons can be more expensive than the digital alternatives, especially for smaller or independent stores. 3. Reduction in coupon availability: Because of the cost and difficulty matching every digital promotion with a paper alternative, grocers warned that in some cases they might scale back the number of promotions and digital deals. 4. Technology investment: Larger chains have already invested heavily in digital infrastructure and loyalty apps and see paper as a step backward. If the City Council were to consider adopting a local ordinance by amending the Rancho Palos Verdes Municipal Code, two major grocery stores would be affected: Ralph’s (on Hawthorne Blvd.) and Smart & Final Extra! (on Western Avenue). The City also has two Trader Joe’s stores, but they do not offer any coupons to its customers and would generally be exempt from the ordinance. Responsibility for ensuring compliance and responding to complaints would fall under the City's Code Enforcement Division. The City’s Code Enforcement Division staffing is limited, comprised of only two Code Enforcement Officers who respond to code-related issues citywide primarily involving private property maintenance and construction, in addition to coyote and peafowl management programs. In addition, a local ordinance would not affect similar changes in adjacent cities, which may likely continue its practice of leaning on digital-only coupons. Given the challenges of a local ordinance, staff recommend the City Council consider placing this issue as a priority in the City’s 2026 Legislative Platform and working with State representatives in the new year to introduce or support legislation that will require paper coupons throughout the state. This will ensure uniform practices across all stores, ensuring that Rancho Palos Verdes residents are able to receive the benefit of paper coupons both within and outside city limits. CONCLUSION: The City Council is being asked to support requiring local grocery stores to offer paper coupons as an alternative to digital-only promotions by requesting our state representatives to introduce or support state legislation in 2026 on the continued availability of paper coupons throughout California. ALTERNATIVES: 3 In addition to Staff’s Recommendations, the following alternative actions are available for the City Council’s consideration: 1) Do not direct staff to work with State legislators to introduce or support paper coupon legislation on the statewide level. 2) Direct staff to prepare a draft ordinance requiring local grocery stores to offer paper coupon alternatives to digital-only promotions. 3) Take other action, as deemed appropriate. 4 *19 h /5 (O-2025-104 REV.) ORDINANCE NUMBER 0- 21946 (NEW SERIES) DATE OF FINAL PASSAGE APR 30 2025 AN ORDINANCE AMENDING CHAPTER 3 OF THE SAN DIEGO MUNICIPAL CODE BY ADDING ARTICLE 11, DIVISION 1, AND SECTIONS 311.0101, 311.0102, 311.0103, 311.0104 AND 311.0105 ALL RELATING TO GROCERY PRICING TRANSPARENCY. RECITALS The Council of the City of San Diego (Council) adopts this Ordinance based on the following: A. Many grocery stores offer "digital deals" or coupons through digital means, such as a smartphone application. This practice becomes problematic because such discounts or coupons are offered only through digital means, disadvantaging those in the "digital divide," or those who do not have ready access to or comfort with computers, smartphones, other digital devices, and the Internet. This often include seniors, low-income households, and nonnative English speakers. B. It has been estimated that 25 percent ofolder adults lack Internet connectivity and 39 percent are without a mobile phone. As a result, many older adults are missing out on digital deals and coupons, worsening the current high inflationary environment for these individuals, who along with low-income households and nonnative English speakers are most often impacted by higher food costs. C. Following similar proposals in New Jersey, Washington, Illinois, and Massachusetts, this Ordinance requires grocery stores in the City of San Diego that offer digital discounts to make physical coupons with identical pricing available to consumers. The Ordinance also requires grocery stores to post a sign or notice in a location visible to consumers -PAGE 1 OF 5-A-1 (O-2025-104 REV.) about their right to the physical coupons upon request and requires that the digital discount price be clearly shown where goods are displayed or on each individual item offered for sale. D. The Office of the City Attorney prepared this Ordinance based on the information provided by City staff, with the understanding that this information is complete and accurate. ACTION ITEMS Be it ordained by the Council of the City of San Diego: Section 1. Chapter 3 ofthe San Diego Municipal Code is amended by adding Article 11, Division 1, and sections 311.0101, 311.0102, 311.0103, and 311.0104, to read as follows: Article 11: Grocery Pricing Transparency Ordinance Division 1: Exclusive Digital Discounts Prohibited §311.0101 Purpose and Intent The purpose of this Article is to ensure equitable access to discount pricing for all consumers, regardless of their access to or familiarity with digital technology. Under this Article, any grocery store that offers or sells goods in the City ofSan Diego and offers digital discounts, such as through a mobile or smartphone application, must make physical coupons with identical pricing available to consumers. The intent of this Division is to prevent discriminatory practices that restrict discounted prices to consumers exclusively through the Internet or other electronic methods, and to promote transparency and consumer fairness. §311.0102 Definitions For purposes of this Division, defined terms appear in italics. The following definitions apply in this Division: -PAGE 2 OF 5-A-2 (O-2025-104 REV.) §311.0103 City ofSan Diego and Cio have the same meaning as in San Diego Municipal Code section 11.0210. Consumer means a person who buys goods from a grocery store. Coupon means a voucher, certificate, documènt, or similar matter entitling the holder to a discount for a good. Digital discount means a store coupon, rebate, or similar instrument that is offered to consumers exclusively through the Internet or any other digital or electronic means including websites, mobile or smartphone applications, QR codes, or email promotions. Goods means groceries and includes foodstuffs and packaged food intended for human consumption or for domestic animals normally kept as household pets, produce, meats, poultry, fish, deli products, dairy products, beverages, baked foods, prepared foods, paper and plastic products, diapers, detergents, soaps, other cleaning agents, pharmaceuticals, nonprescription drugs, bandages, female hygiene products, and toiletries. Grocery store means a business, supermarket, or warehouse club engaged primarily in the retail sale of goods, rather than food prepared solely for consumption on the premises. Digital Discount Practices á) Any grocery store that offers digital discounts to consumers for the purchase ofgoods must make physical coupons for the digital price available to consumers upon request. -PAGE 3 OF 5-A-3 (O-2025-104 REV.) (b) The digital discount price must be clearly shown where goods are displayed or on each individual item offered for sale. e) Grocery stores must post a sign or notice in a location visible to consumers that states the following: Fair Pricing for All: Your Right to Equal Discounts - Under San Diego law, all digital discounts must also be available as physical coupons. Violations of this law are subject to San Diego Municipal Code section 311.0104. §311.0104 Unlawful Pricing Practices Violations of this Division may be pursued as an act o f unfair competition within the meaning of section 17200 of the California Business and Professions Code and subject to the remedies and penalties set forth in Division 7, Part 2, Chapter 5 of the California Business and Professions Code, as may be amended. §311.0105 Exceptions This Division does not apply to grocery stores that operate exclusively online through the Internet and do not have a physical presence in the City. Section 2. The Council dispenses with a full reading of this Ordinance before its passage because a written copy ofthis Ordinance was made available to the Council and the public before the date of its passage. -PAGE 4 OF 5-A-4 (O-2025-104 REV.) Section 3. This Ordinance will take effect and be in force on the ninetieth day from and after its final passage. APPROVED: HEATHER FERBERT, City Attorney , By »c. 1 David J. Karlin Senior Deputy City Attorney DJK:crn March 3,2025 April 7,2025 REV. Or.Dept: Council District 9 Doc. No. 3986114_4 I certi fy that the Council of the City of San Diego adopted this Ordinance at a meeting held on APR 1 5 2025 DIANA J.S. FUENTES City Clerk By kléfldu LDepu City érk Approved: - r --£ (date) TODDORIMayor Vetoed: (date) TODD GLORIA, Mayor -PAGE 5 OF 5-A-5 Passed bythe Council of The City of San Diego on APR 1 5 2025 , by the following vote: Councilmembers Yeas Nays Not Present Recused joe LaCava Jennifer Campbell L Stephen Whitburn Henry L. Foster 111 E Marni von Wilpert Kent Lee Raul A. Campillo l Vivian Moreno Sean Elo-Rivera Date of final passage APR 3 0 2025 AUTHENTICATED BY: TODD GLORIA Mayor of The City of San Diego, California. (Seal) DIANAJ.S. FUENTES City Clerk of The City of San Diego, California. By OftfL íh , Deputy 1 HEREBY CERTIFY that the foregoing ordinance was not finally passed until twelve calendar days had elapsed between the day of its introduction and the day of its final passage, to wit, on AR 2 4 2025 , and on APR 3 02025 1 FURTHER CERTIFY that said ordinance was read in full prior to passage or that such reading was dispensed with by a vote of five members of the Council, and that a written copy of the ordinance was made available to each member of the Council and the public prior to the day of its passage. (Seal) DIANAJ.S. FUENTES City Clerk of The City of San Diego, California. By 27-Deputy Office of the City Clerk, San Diego, California Ordinance Number O- 21.46 A-6