WAL-MART NAMED TOP COUPON REDEEMER

Carol Angrisani

BENTONVILLE, Ark. -- Wal-Mart Stores here has surpassed the Kroger Co. as the No. 1 retail redeemer of coupons in the United States, according to new data from NCH Marketing Services.

Wal-Mart secured the lead after several years of gaining on conventional supermarkets, according to the 2005 Coupon Trend report due to be released later in June from Deerfield, Ill.-based NCH, a coupon processing and promotion marketing services company. NCH provided SN with an advance copy of the report.

Cincinnati-based Kroger, now No. 2, had held the top spot for more than a decade. However, over the past three years, Kroger's redemption volume of consumer packaged goods coupons declined 10% while Wal-Mart's volume grew 20%. NCH declined to release the number of coupon redemptions.

NCH attributed the ranking change to the fact that Wal-Mart has strengthened its grocery assortment and upped its number of stores.

When notified of the new ranking, Sharon Weber, a Wal-Mart spokeswoman, said the company embraces coupons as part of its customer-driven focus.

"When our customers use coupons, that provides additional value to the savings we're already offering through everyday low prices," Weber told SN.

Kroger didn't reply by presstime to SN's request for comment.

The next three on the Top 5 list are Ahold, military commissaries and Albertsons, respectively. Besides Kroger and Wal-Mart, the ranking has remained basically unchanged for the past three years, with the exception of 2002, when Safeway -- not Albertsons -- was in fifth place.

The fact that consumers are taking more of their coupons to Wal-Mart as opposed to a traditional food retailer like Kroger should motivate supermarkets to revisit their coupon strategies, said Charles Brown, NCH's vice president of marketing. For instance, they should merchandise product at the time of a coupon event and advertise the total savings to the consumer, Brown noted.

"The shopper who uses coupons is someone who is price- and promotion-sensitive, and grocery retailers could better use manufacturer coupons as a way to compete and attract that shopper," Brown said.

Among other highlights in the 2005 Coupon Trend report:

- Coupon distribution continues to increase while redemption slides.

- CPG marketers distributed 275 billion coupons in 2004, a 6.6% increase from 2003. However, just 3.3 billion coupons were redeemed in 2004, down from 3.6 billion in 2003 and 4.5 billion in 2000.

The redemption slide is due in part to marketers making coupons less attractive to consumers, according to NCH. Most coupon expiration periods lasted 2.8 months in 2004, down from 2.9 months in 2003 and 3.3 months in 2000.

CMS, another coupon settler, also cited baby boomers, whose use falls off as they become empty-nesters, as a major reason for the decrease in redemption. Winston-Salem, N.C.-based CMS said by its count, redemption fell 10% last year, to 3.2 billion.

CMS said competition in household products was a major factor in last year's distribution increase, which it put at 9%, to 342 billion.

Marketers also haven't backed down from the trend of requiring multiple item purchases, both companies said. In 2004, 26% of coupons required consumers to purchase two or more items in order to receive the face value discount, according to NCH. The same percent of coupons had this characteristic in 2003.

Despite the decline in redemptions, the fact that distribution is up indicates that coupons still serve as a purpose vehicle, Brown said.

Coupon Clippers

Shoppers are taking more coupons to Wal-Mart than to Kroger.

Top 5 Retail Coupon Redeemers

2004

1. Wal-Mart

2. Kroger

3. Ahold

4. Military commissaries

5. Albertsons

2003

1. Kroger

2. Wal-Mart

3. Ahold

4. Military commissaries

5. Albertsons

Source: NCH Marketing Services