Coupon redemption declined in 2017: report

Clipping coupons is still a favorite national pastime, saving consumers $3.1 billion last year, but the savings could have been even more substantial if manufacturers better allocated their marketing budgets, according to a report issued by NCH Marketing Services, a subsidiary of Valassis, a leading coupon delivery firm.

In its Year-End 2017 Coupon Trends Analysis for Consumer Packaged Goods (CPG) report, released today, NCH revealed that CPG marketers drove a 27% increase in overall digital distribution of coupons. While this contributed to an additional 47% in paperless coupon redemption, it was less than 12 share points of total 2017 redemption, and insufficient in scale to replace volume shifted from marketers’ other coupon strategies. As a result, overall CPG coupon redemption declined in 2017.

“The dynamically changing retailer landscape, including e-commerce, is one of the influences driving marketers and retailers to broaden the media mix to include paperless coupons, yet the volume of redemption activity today is focused in traditional bricks-and-mortar shopping experiences for the consumer,” said Charlie Brown, vice president of marketing at NCH Marketing Services, headquartered in Livonia, Mich.

“The challenge of delivering the right coupon media mix is not new to CPG marketers, but it is now compounded by a changing retailer landscape, shifting consumer product preferences and value-seeking shopping behaviors across the path to purchase,” Brown said. “Marketers are striving to continually optimize and improve results, and when it comes to coupons, that takes a bit of art and data science to build the appropriate coupon strategy. Companies who strike the right balance of print and digital media can expect improved results in a transforming CPG environment.”

Traditional free-standing inserts, or FSIs, remain the predominant vehicle to reach consumers, NCH reported, accounting for 93.7% of coupon distribution volume. FSIs are also the top media format for redemption volume as well.

“Mail ranks as the most preferred way to obtain coupons with 44% of consumers preferring this channel, according to Valassis’ 2K17 Coupon Intelligence Report,” Brown said. “However, smartphone/mobile devices recorded the greatest increase with 32% of consumers preferring this method versus 24% in 2016.”

Released last March, the 2K17 report found that most consumers still create a list prior to shopping and 84% use coupons during this process. Since more than 45% of consumers make CPG purchase decisions at home before their shopping trip, it is important for brands to reach them in this early planning stage, Valassis reported. However, brand marketers can still sway consumers in the store because 86% of shoppers make a purchase based on a discount in the store.

The study also found that the buying process does not end with the purchase, as 53% of consumers scan receipts with a mobile device to receive cash back and/or points, providing an opportunity to increase brand loyalty post purchase.

Some retailers, such as East Coast ShopRite stores supplied by Wakefern Food Corp., regularly incorporate manufacturer coupons into their weekly circulars. Last week, for example, ShopRite featured Arm & Hammer 2X laundry detergent on sale for $1.99 (a savings of $1.70) with a callout informing readers to “Look for $1.00 OFF MFR coupon in most Sunday papers.”

This week ShopRite is running its Big Brand Bash Digital Coupon Sale that requires shoppers to log in for deep-savings coupons on a host of items including Pepperidge Farm Cookies – at $1.49 the “lowest price of the year” – as well as Friendly’s ice cream, Pepsi, Charmin, Welch’s grape juice and Garnier Fructis shampoo.

That is a smart move, Brown noted.

“As cited in recent research, circulars remain a mainstay for grocery shopper planning, and coupons are the No. 1 influential media on consumer grocery purchases, so an integrated print and digital media plan for coupons is important to maximize their power in motivating where consumers will shop, and what brands they will buy,” said Brown.

The NCH Year-End Coupon Trends Analysis report found that the average face value of coupons available increased to $1.95 in 2017. Some of that increase is attributable to high-value limited-time coupons for nonfoods products, like Centrum Vitamins, which has run “$4.00-off for two weeks only” offers.

“NCH measures the expiration dates on coupons by tracking the number of days offers are valid,” Brown said. “CPG marketers have been shortening them slightly every year for decades, but 2017 was an exception with no overall change. The average was 7.1 weeks in both 2016 and 2017. Thus, redemption volume last year was not affected by any sudden change in expiration dates.”