Traditional supermarkets still account for the bulk of coupon redemption, but a rising number of shoppers also are taking their coupons to wholesale clubs, mass merchandisers and discount stores.
In 1993, conventional supermarkets redeemed 85% of all coupons, excluding those for tobacco products. By last year, the number slipped to 71%, according to CMS, Winston-Salem, N.C., a subsidiary of Inmar Enterprises, a provider of promotional settlement and information management services.
While redemption is sliding at supermarkets, it's rising at other channels. In 2003, 15% of coupons were redeemed in mass merchandisers, dollar stores and variety stores, up from 5% in 1993.
"People are going to alternative outlets, and taking their coupons along," said Lorraine Gallaher, director of marketing, CMS.
Kroger Co., Cincinnati, was the No. 1 redeemer of coupons in 2002, but Wal-Mart Stores, Bentonville, Ark., placed a close second, according to NCH Marketing Services, Deerfield, Ill., a coupon processor. NCH expects Wal-Mart to outpace Kroger eventually.
Supermarkets are facing particularly strong competition in the area of nonfoods. Last year, supermarkets redeemed 61% of nonfood coupons, down from 67% in 2002, according to CMS. Meanwhile, mass merchandisers redeemed 22% of nonfood coupons in 2003, up from 18% in 2002.
The shift in redemption could have big implications for traditional supermarkets. After all, coupon shoppers tend to have larger families and spend more on groceries.
"Coupon shoppers are not the type of consumers you want to lose," Gallaher said. "Retailers should be doing anything they can to keep these shoppers in their stores."
Retailers SN interviewed said they are aware of the importance of the coupon clippers, and are taking steps to keep them in their stores.
"We find that more and more of our shoppers are focused on value," said Kevin Srigley, vice president, marketing, Giant Eagle, Pittsburgh.
To cater to its coupon clippers, Giant Eagle supports manufacturer coupons and offers double coupons up to 99 cents. Likewise, it offers checkout coupons and accepts most Internet coupons. Giant Eagle is also leveraging data obtained from its Giant Eagle Advantage loyalty card to target specific coupons to specific shoppers.
"Enough of our consumers are using coupons that it warrants coupon promotions," Srigley said.
Food Lion, Salisbury, N.C., also accommodates coupon users. To do so, it accepts traditional and most Internet coupons. It also distributes checkout coupons, and sends coupons via direct mail.
"At Food Lion, we think coupon redemption is still an important aspect of customer service and providing value," said Jeff Lowrance, company spokesman. "We more than welcome our coupon-using customers."
Another way that retailers are enhancing their coupon promotions is by issuing coupons that are valid only in their stores. Such is the case at Price Chopper Supermarkets, Schenectady, N.Y., which ran a major private-label coupon promotion in December.
About a handful of coupons were offered in the retailer's store circular, including $1 off any two Price Chopper-brand cereals; $1 off any two Central Market-brand salad dressings; $1 off any two Price Chopper cookies and crackers; $1 off any pack of Price Chopper diapers; and $1 off any bag of Price Chopper dog food, 17 pounds or larger.
The promotion was aimed at rewarding loyal Price Chopper shoppers, according to Regina Tator, the chain's private-label category manager. "Coupon clippers aren't a huge percentage of our consumers, but those consumers who use them are very loyal," Tator said.
Tator is confident that most people don't think of loading up on coupons when they go to other retail channels. But she said that could change. So Price Chopper will do what it takes to keep coupon shoppers happy.
"Of course, we don't want to lose any business to the mass merchandisers," she said. Private-label couponing is not only a way to reward loyal consumers, but to build retail brands. The December promotion, for instance, featured Price Chopper's private-label diapers, which recently were revamped with new closures and other enhancements.
Price Chopper plans to run other private-label coupon events at least once a quarter, according to Tator.
"Couponing helps encourage consumers to try our brand," she said. "We're confident that once they try our products, they'll like them."
Coupon promotions like Price Chopper's could make all the difference in where a consumer decides to shop, said Charles Brown, vice president of marketing, NCH.
"Traditional supermarkets should encourage consumers to bring in manufacturer coupons and show that they welcome them," Brown said.
Applying Ingenuity
Along with tried-and-true strategies, retailers should also think of nontraditional ways to compete, such as devoting a checkout lane specifically for shoppers with coupons, said Brown.
"This would make it easier for coupon users to do their shopping," Brown noted. Retailers that don't cater to coupon clippers not only risk losing shoppers, but also the 8-cent handling fee for each coupon redeemed, Brown warned.
One advantage that supermarkets have is that, for the most part, consumers still equate coupons with traditional supermarkets, not alternative outlets, said Phil von Stade, president of VSI Targeting, Westport, Conn., a firm that helps manufacturers optimize their coupon promotions.
Further, most other channels don't delve into the level of promotional activity that supermarkets do, such as offering double and even triple coupons, said Von Stade, who is also spokesman for the Association of Coupon Professionals, Des Plains, Ill.
John Morgan, vice president, marketing, Lees Marketing, Mount Prospect, Ill., agreed. "For the most part, people still think about using coupons in grocery stores, not in Wal-Mart," said Morgan. Lees Marketing is a promotion company that provides coupon redemption, among other services.
Still, many retailers aren't taking any chances.
Penn Traffic Co., Syracuse, N.Y., has a number of measures in place to accommodate its coupon shoppers. For instance, it offers double coupons, Catalina checkout coupons, instant coupons and select Internet coupons.
The retailer also carries a wide selection of coupon-friendly brands and product sizes, according to Joe Ramirez, company spokesman. Consumers can come to its stores and use a coupon to buy, say, a 6-ounce tube of toothpaste, which will give them greater savings than if they used the same coupon at a mass merchandiser, which may only carry the larger size or a multi-pack, said Ramirez.
"We like to cater to coupon shoppers with aggressive promotions so that they'll have less of a reason to use coupons at our competitors, such as mass merchandisers," said Ramirez.
