- Coupons have a long history, and consumers rely on them, but coupon distribution and usage are declining.
- Brands and retailers should embrace new ways to engage consumers with coupons based on how today’s consumer uses media.
Ever since Coca-Cola introduced the first coupon in 1887, coupons have continued to influence where people prefer to shop and what they buy. Vericast is one of a few companies that collects data on coupon distribution and redemption as we stay abreast of trends affecting the coupon industry. We studied coupon data for the first half of 2022 and identified some key findings that have major implications for brands, retailers and the coupon industry. In some ways, the story picks up where last year left off.
consumers still want coupons
Marketers should keep using coupons because it’s clear that consumers still want coupons. In fact, 60% of consumers we recently surveyed say coupons and discounts are more important than ever.1 Not only do consumers want coupons, in the current inflationary environment with higher prices on everything from bread to batteries, consumers need coupons. Coupons help consumers stretch their dollar so they can afford everyday items. Customers who were previously very brand loyal are now open to trying new brands if it means they can find the item they need on the shelf and get it at a lower price. Considering these factors, coupons remain a great way to lure potential new customers — and keep current customers — making now an ideal time to build an effective coupon strategy into your marketing plan.
Inflation has outpaced face value
When planning how coupons will fit into their overall marketing strategy, manufacturers need to be mindful of what makes a coupon desirable. Face value, for instance should keep pace with consumers needs and the economic conditions facing consumers.
Unfortunately, that has not been the case when comparing average coupon face value with today’s inflation rate. This essentially means coupons carry less value now when consumers need them more.
Coupons need to evolve
Consumers want coupons but coupon distribution and redemption are down, so there’s obviously a gap that exists. Marketers need to adapt to consumer needs and desires and close that gap, especially for distribution. Digital or paperless coupons and direct mail coupons are increasing in popularity. Direct mail is gaining favor by consumers for discounts and coupons, especially when combined with QR codes and personalized URLs (PURLs). Marketers should take note of this and lean into these channels to increase distribution for their coupons.
Digital couponing is up
Following the trend toward digital, well, everything, consumers are embracing digital coupons. In fact, paperless coupons represent the one distribution method showing increased redemption overall, up 5% from last year. Redemption for non-food items grew even more, up 23% in 2022.
Direct mail has increased its share of food coupon redemption
For food products, direct mail grew in share of media for food product coupons redeemed, up 10%. Direct mail now makes up 18% of coupon redemptions for that media category.
What’s behind The decline in distribution and usage?
Despite a few increases in coupon media types, in the first half of 2022, coupon distribution decreased 17% compared with the same period in 2021. Companies distributed 95 billion coupons during that period last year and 79 billion this year. Redemption follows the same trend. Consumers redeemed 375 million coupons through July 2022, down 19% from the 465 million coupons they redeemed last year. These rates continued to decline as the industry seeks efficient means of delivering deals to consumers.
Brands are being challenged by new customer acquisition, and traditional retailers continue to be threatened by the pandemic-induced rise in ecommerce. In addition, the economy’s continued supply chain challenges mean marketers are unwilling to risk a poor brand experience by promoting products that may not appear on shelves in time or appear only in limited supply.
To learn more about what grocery shoppers are thinking, check out our 2022 CPG + Grocery TrendWatch report.