Coupon trends show more digital discounts

by August 22, 2013

Buyers love a bargain, and indeed it seems that U.S. consumers have become conditioned to withhold purchasing until they feel they’re getting a hefty percentage off a regular retail price.  Check out the spectacular fail of J.C. Penney’s  no-gimmicks, everyday pricing strategy that has the venerable department store on the ropes.

My theory is that we’re shopped out — the easy availability of cheap goods to all but the most low-income of households have closets bulging with excess garments, living areas cluttered with knickknacks and electronics and even the pantries of most of American (obviously there are exceptions) crowded with cheap food.   (See this fascinating Bloomberg Business Week chart on how Americans spend their food dollars; it notes that on average, households in the U.S. use 11.2 percent of after-tax income for eatables.) Point being, we need the thrill of the hunt to get us into stores, as Penney’s has learned to its woe and as gimmicks ranging from weekly coupon inserts to post-Thanksgiving Black Friday frenzies to shopper loyalty programs.

As we head into the fourth-quarter ramp-up of (merchants hope) consumer shopping, you might want to take a look at how national trends in coupon and deals use is reflected in your region.  It’s a fun personal finance story, a good premise for delving into marketing and advertising plans with local small businesses and an interesting industry unto itself.

It’s probably inevitable that paper coupons are on their way out — good for trees but not, perhaps, for those extreme shoppers who fill binders with multiples of neatly clipped manufacturer’s vouchers, eventually scoring umpteen boxes of macaroni and cheese or tubes of toothpaste for pennies on the dollar by combining coupons with store sales and promos.  Here’s a really interesting report released by marketing giant Valassis Corp. on July 30. The media release for the  U.S. Mid-year 2013 CPG Coupon Industry Facts Report says coupon redemption for the first half of 2013 was down more than 8 percent, but that digital coupon options by marketers is growing.  What’s really interesting are some of the tactics that CPGs (consumer packaged goods companies) are using – like making coupons expire sooner, or requiring the purchase of more than one product to get the cents-off special.  Here’s the link to the full report and other interesting insights from the Valassis subsidiary NCH Marketing Services Inc., which probably should be in your bookmarks as a source of consumer behavior and marketing trends.

I also thought it was interesting that manufacturers’ coupons increasingly are for non-food items — I wonder if that means more are being redeemed by non-grocers like drugstore chains and the like — and how coupon-handling cost affect other promos.

Another news peg for retailer discount strategies is the news that Kroger subsidiary Dillons and the regional chain Meijer are discontinuing double couponing; in favor of other strategies. In Meijer’s case it’s a somewhat belated (compared to other retailers) loyalty program that requires consumers to log in and digitally clip coupons and promotional offers like $5 off a certain purchase level, or 15 percent off general merchandise on specific days.

Double coupons are a consumer favorite.  You might localize by comparing and contrasting the loyalty programs, coupon policies and other promotional strategies at your area’s national and regional chains, and especially how independent markets or local chains are competing.  One family-owned grocer near me, for example, with about 12 moderately upscale markets, has a loyalty program that doesn’t require any clipping by consumers; you’re identified by typing in a phone number or swiping a credit card and automatically get the best prices, plus perks like an e-mail telling you when items you’ve purchased before are on sale and a $5 birthday coupon.

You can make this a consumer coping story with a big graphic or grid, but also a substantive marketing/merchandising piece with executive interviews about how to woo a fatigued and fragmented market, how consumer demands have changed since the recession, how their business responds to economic reports about consumer sentiment and personal income, and other ways the economy shapes consumer goods marketing.

Don’t forget that vendors and suppliers of the software that runs loyalty programs, as well as advertising and marketing firms, web designers and others get spillover business from these digital marketing strategies and might make good business profiles.  And in a twist that might bring a rueful smile to the faces of ousted Penney’s executives, here’s a TIME column about a former extreme couponer who admits that chasing all those deals is a waste of time.