Systemwide at Kroger, mobile coupons have room to grow

Articles
January 14, 2009

Systemwide at Kroger, mobile coupons have room to grow

Fraud problems with Internet coupons have led many retailers to stop accepting them—and have left proponents of electronic distribution without a clear path. Transmission to cell phones could be the next wave despite some technology and social questions it raises: Would cell users need to pay extra for Web service to receive them, and would they be economical? How secure would they be? How quickly and easily could they be processed without slowing down checkout lines? Which extra technology investments would retailers need to make? Would cell users think of coupons sent to them as spam? Would signing up for one service potentially inundate a user with coupons and enlarge their cell bill? Would privacy concerns impede usage?

Fraud problems with Internet coupons have led many retailers to stop accepting them—and have left proponents of electronic distribution without a clear path. 

Transmission to cell phones could be the next wave despite some technology and social questions it raises: Would cell users need to pay extra for Web service to receive them, and would they be economical? How secure would they be? How quickly and easily could they be processed without slowing down checkout lines? Which extra technology investments would retailers need to make? Would cell users think of coupons sent to them as spam? Would signing up for one service potentially inundate a user with coupons and enlarge their cell bill? Would privacy concerns impede usage? 

A program between Cellfire and Kroger that involves CPG leaders Procter & Gamble, Clorox, General Mills, Pepperidge Farms, Kimberly-Clark and Del Monte has gone national across 2,200 chain stores. The program marks the first time a mobile application has been linked to a user’s grocery savings card and a retailer’s point-of-sale system in a closed loop to enable end-to-end digital coupon processing. It applies discounts automatically when customers present their savings cards at checkout. No paper is involved. Consumers can manage coupons from their cells or their computers at home, on the go, or in the store. Cellfire, which is not a text message coupon service, issues new grocery savings offers every two weeks.

“We’re seeing an increasing number of brands realize the value of mobile marketing,” said Laura Marriott, president of the Mobile Marketing Association, which gave Cellfire its latest Innovation Award. 

Still, industry figures peg consumer usage of mobile coupons at 1%, so critical mass will take some time to attain, and if it happens, that will inspire more brands to devote resources to mobile coupon efforts. Three key values of mobile coupons are their accountability for brand spend, the convenience for cell users, and the loyalty build for retailers.  As the technical and social questions unfold and get addressed, and as cells become the primary communications lines for millions more, this could prove to be a natural evolution over time.