Facing a coupon crossroads?

April 06, 2012

CPG marketers tighten redemption reins on coupons, as Ralphs stops doubling values in SoCal - all while consumers depend on these savings more.

Ralphs is no longer doubling coupon values in its southern California stores. If this is a sign of industry actions to come—since retailers anticipate price hikes in staples and need to lessen waste in their systems—millions of coupon-toting shoppers will be upset in 2012.  Stores that find ways to visibly help people stretch budgets should gain favor.

Several industry studies show how dependent shoppers have become on coupons in this persistently sluggish economy. They saved $4.6 billion with coupons in 2011, up $500 million or 12.2% over the prior year and 58.6% above the pre-recession 2007 level, said the Annual Topline U.S. Consumer Packaged Goods Coupon Facts Report from NCH Marketing Services, Inc., a Valassis company.

Consumers culled those savings from $470 billion in coupon value offered by CPG marketers in 2011, a 26% rise since 2007.

Eight out of ten consumers (80.6%) said they use coupons regularly, up a significant 17 share points from pre-recession levels. More than one-third of consumers surveyed said they redeemed more coupons in 2011 than in 2010, up 14.3 share points. More than nine out of ten (nearly 91%) use coupons when planning a shopping list, NCH added.

Against this backdrop of increased reliance, CPG marketers distributed 305 billion coupons in 2011, down 8.1% from the record-setting year of 2010. The current level is still 20 billion ahead of the pre-recession 2007 mark. The overall number of grocery coupons declined, although the candy and gum, butter and margarine and dried fruit categories posted increases. The overall number of health and beauty care coupons held steady.

Marketers pulled in the reins elsewhere in 2011 too, NCH reported:
•    27% of coupons distributed require multiple purchases, up two percentage points from the prior year
•    Coupons expired in an average of 9.9 weeks, down from 10.4 weeks in 2010
•    Face value of $1.54 remained the same as in 2010.

Despite this tightening, grocery coupon redemption rates were the same as in 2010, and HBC coupon redemption rates rose 20%.

Overall in 2011, nine out of ten coupons (89.4%) were distributed in freestanding inserts. With fewer coupons offered, and high rates of consumer responsiveness, FSI redemption rates climbed an average of 11.1% for grocery coupons and 25% for HBC.

On the digital coupon side, marketers distributed 11% more print-at-home and paperless offers in 2011, said NCH. Nearly two-thirds of consumers (64%) said they regularly search the Internet for CPG coupons, up 13.5 share points over 2010.

Retailers and CPG brands should court digital coupon users, suggests research findings by GfK Knowledge Networks, because they “shop more frequently and spend significantly more during each trip than the average U.S. consumer.”

In the 52 weeks ended August 27, 2011, digital coupon users:
•    Made 22% more shopping trips per year than the average U.S. shopper—69 to 57.
•    Spent 23% more per trip—$55.05 to $44.87.
•    Spent 49% more per year—$3,803 to $2,545.
•    Made 48% more stock-up trips per year—18.6 to 12.6.

There is also an immediacy to their trips—62% of visitors to Coupons.com planned to visit a grocery store within two days of printing coupons, including 25% the next day and 18% the same day.

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