COUPON COMEBACK

JOHN KAROLEFSKI

In-store coupons are on the rise, according to industry observers, and a good part of the reason is convenience.

Food retailers are utilizing multiple distribution points within the store to make it easier for shoppers to take advantage of product savings and trial of new items. No longer is the weekly ad circular the primary coupon-distribution vehicle.

Today, coupons are available from dispensers at the shelf in the center of the store. They're generated at checkout in paper form and as "clipless" coupons from a store's card-based, frequent shopper program. Coupons are even given to shoppers as part of some sampling events.

Such promotional vehicles have become more prevalent over the years and, more than ever, retailers have made coupons a prominent element in their marketing programs. "Coupons are an important part of the marketing promotion mix," said Michael Ross, director of marketing and eCommerce Group, Meijer, Grand Rapids, Mich. "Consumers have a tendency to treat them as cash, allowing them to extend their buying power. They also encourage trial and can have a measurable lift in category sales."

Indeed, in-store coupons have lately been the only bright spot in the coupon industry, which has struggled for several years with overall distribution and redemption. While in-store coupons are not tracked by any organization, anecdotal evidence points to steady growth over the years. Much of this increase has come from coupons generated at checkout and electronic discounts from card-based loyalty programs. There are simply more stores offering them every year, said observers.

Susan Hamilton, director of customer marketing for Montvale, N.J.-based A&P's Atlantic region, says the chain has been increasing its distribution of in-store coupons. Its assortment of coupon vehicles now includes at shelf, at checkout, during samplings and via a card-based loyalty program.

"Coupons are a key part of our overall program of offering consumers value," she said. "We find that distribution is increasing, and we like to think that redemption is increasing as well."

Retailers, marketing consultants and academics agree that the benefits of in-store coupons vary, depending on the type of vehicle. However, they all take advantage of having a captive audience to deliver a brand message and an incentive to buy.

"All in-store coupons have the benefit of being where the target is," explained Sara Owens, president of Promo Pros, a St. Louis-based consultancy. "Three-quarters of purchase decisions are made in-store at the point of sale. Anything that you can do to influence consumers at that critical decision-making point is of great value."

Richard George, a professor of food marketing at St. Joseph's University, Philadelphia, said in-store coupons are increasing in popularity because shoppers are time-starved. "So retailers are looking to bring convenience to food shopping and to facilitate that whole process."

Convenience is the key benefit of having coupons available at the shelf, according to Hamilton of A&P. They encourage customers to try a new brand, especially if they aren't especially brand loyal, or if they can't decide between different brands. But mainly they appeal to shoppers who normally wouldn't clip coupons at home and bring them to the store.

Checkout Benefits

Hamilton and other retailers also recognize the benefits of coupons generated at checkout. "They can target specific consumers based on their spend levels and purchase history, and then target offers to those consumers," she said.

"Coupons distributed at checkout offer a strategic advantage to retailers who understand the benefits of 1-to-1 marketing," said Ross of Meijer. "The shopping basket provides insight into the customer's lifestyle and buying behavior. Understanding this information provides the opportunity to target coupons at higher margin categories or merchandise that fits the customer's profile and is not being shopped. For the customer, offering incentives that are meaningful and aligned to their shopping behavior adds value to their shopping trip and promotes excitement of new-item trial."

The ability to target shoppers and reward their loyalty prompted Winn-Dixie to debut its frequent shopper program called the Customer Reward Card. The program began in March and offers "clipless" coupons in the form of automatic electronic discounts, as well as the chance to earn rewards for accumulating points by purchasing products.

"It's a wonderful tool," said Joanne Gage, senior director of consumer and marketing services for the Jacksonville, Fla.-based chain. "It opens up a lot of avenues for marketing -- knowing your customers better, having a relationship with them, offering them discounts through electronic coupons, target-marketing them and rewarding them for shopping with you."

Another way to distribute coupons also involves rewarding consumers for shopping -- giving them free samples. Schenectady, N.Y.-based Price Chopper frequently distributes coupons as part of the 400 sampling events staged each week at its 101 supermarkets in six Northeastern states.

"Once the shopper has sampled the product, the coupon enables them to purchase it with a cents-off savings. If they enjoy it, they will probably buy it again -- with or without a coupon," said Maureen Murphy, the chain's consumer services manager.

"It really gives the consumer an incentive to purchase the product," agreed Hamilton of A&P. "They're getting to sample the product as well as receiving an incentive -- in the form of a coupon -- to purchase the product."

According to Owens of Promo Pros, this tactic has advantages other than rewarding shoppers and giving them incentives. For example, it gives both trading partners a way to measure the promotion.

"If you're not using the right sampling vendor, it might be difficult to get accurate information as to how many products were given out," she explained. "If that's the case, coupons can help to figure out the impact of the promotion through redemption."

Special Coupons For Sampling

Owens explained that special coupons are often produced for a sampling event. Retailers want these coupons to have "Do Not Double" printed on them, or in some cases, bear a special EAN 99 code that prevents doubling at checkout. The redemption rate can help trading partners determine how successful the sampling program was.

"It's always important to remember that coupons are part of a larger marketing program," she said. "They are not the only thing that should be in your arsenal. Sometimes they won't be effective, and sometimes they will. But just as you have multiple marketing objectives, you should also have multiple tactics.

"Coupons can play a supporting role in an overall marketing program," she went on to say. "For example, when a new product is launched, the manufacturer likes to take advantage of multiple programs to [give customers an incentive] to purchase the product. One of the ways is offering in-store coupons in addition to everything else they are doing to launch the item."

George, the marketing professor, strongly recommends in-store coupons as a key component of a retail marketing program.

"The overall challenge for retailers is how to make supermarkets fun and exciting. Most people hate to shop. Retailers can use coupons to create a certain level of excitement -- almost like a treasure hunt -- and that will be a way to differentiate the store."

Gage of Winn-Dixie said coupons contribute to a store's "price impression," and that's as important as the whole shopping experience. "Prices and meaningful value -- meaning good prices on items that customers want -- gets them into your store."