Jill Cataldo is a coupon master.
She started cutting them out to save a dollar here and 50 cents there during the Great Recession when she had two kids in diapers and money was tight. Beginning with a training session at the library in her suburban Chicago, she shared what she learned and now has a column and website where she writes about coupon offers and other ways to spend less.
However, the pandemic has turned Ms Cataldo’s world upside down. Paper coupon inserts in the Sunday paper looked flimsy. Even the increasingly popular digital coupons were hard to come by.
“There are brands that I’ve followed for over a decade that just aren’t giving out a lot of coupons right now,” Ms. Cataldo said. “It’s kind of frustrating because we’ve depended on it for a long time.”
Now, the steepest rise in the cost of living in four decades makes bargains even more desirable. “With inflation, this should increase tremendously as a tool to support customers,” he said Sanjay Dhar, marketing professor at the University of Chicago Booth School of Business.
But this tool is getting harder and harder to get. In 2021, Kantar Media estimates that there were 168 billion in circulation, both in print and digital. That was down from about $294 billion in 2015.
The declining coupon market includes not only the number of coupons distributed, but also the portion surrendered at the checkout. According to a study by economists from Harvard University, Georgetown University and Heinrich Heine University Düsseldorf, redemption rates fell from about 3.5 percent in the early 1980s to 0.5 percent of all printed and digital coupons in 2020.
The economists see a larger phenomenon: Consumers, increasingly pressed for time, don’t even want to deal with small annoyances to save a few dollars on toothpaste.
“Declining coupon usage and redemption rates indicate a fundamental shift in consumer shopping behavior,” the authors write. They added: “We see this as additional evidence that decreasing price sensitivity reflects a longer-term secular trend.”
At the same time, mobile phones have enabled all sorts of other incentives, including cash back rewards, points redeemable for store credit, and competitive prizes.
“Practitioners often want to bring discounts to consumers in a seamless manner,” said Eric Anderson, professor of marketing at Northwestern University’s Kellogg School of Management. “It’s not clear that traditional coupons do this.”
That explanation offers little comfort to people who rely on coupons to keep their grocery costs down, like Ms. Cataldo’s readers.
“From a consumer perspective, I don’t think they’re like, ‘Oh, we don’t care.’ We’ll take care of it,” Ms. Cataldo said. “It’s just that right now we have fewer tools to play the game.”
A worthy incentive
The couponing industry as we know it began in the early 1970s when a Michigan printing company, Valassis Communications, began distributing brochures with discounts on specific products that could be redeemed at any store.
Valassis totaled the slips, and the manufacturer refunded the retailer the discount. Grocers soon recognized the value of coupons to drive traffic to their own stores and began introducing their own newspaper inserts. The number of printed coupons issued peaked at 340 billion in 1999, just as newspaper circulation peaked, according to Inmar Intelligence, the other major coupon clearing company alongside Valassis.
But a decline in repayment rates had already begun. It’s difficult to pinpoint the reason for this, but people close to the industry believe it has to do with the rise of dual-income households as more women entered the workforce. Ms. Cataldo recalls growing up in the 1980’s when, as she says, her mother was enthusiastic about using coupons.
“It was a little different culture back then because we had so many parents who stayed at home and had time for that,” she said. “It’s time that pays well, but you have to have that time, and if you’re working eight hours a day, you probably don’t have that.”
The use of vouchers experienced a resurgence during the 2007-09 recession, leaving millions of people out of work for much longer and receiving far less financial assistance than they would receive during the pandemic recession a decade later. “Couponing” became a widely used verb thanks to the reality show Extreme Couponing, which got people into the practice with promises of stackable discounts that could take the cost of a shopping cart’s worth of purchases to zero.
But what delighted serious couponers dismayed manufacturers who focus on getting people to buy things they wouldn’t otherwise buy and not giving discounts to people who would buy the product anyway. Because of this, brands began withdrawing promotions and limiting the number of coupons that could be used on any given trip.
At the same time, grocers and wholesalers came under pressure from e-commerce platforms like Amazon. They responded by increasing their own-brand offerings and asking companies like Procter & Gamble to lower prices on branded items.
“They want to offer the best deals so they’re competitive at the shelf,” said Aimee Englert, who leads customer strategy for consumer goods companies at Valassis, which is now part of a company called Vericast. “It ends up limiting the budgets manufacturers have to pull levers, e.g. B. to provide a voucher.”
As their margin for discounts narrowed, brands wanted to make sure they were squeezing as many additional purchases out of their advertising dollars as possible. The average value of the coupons shrank as well as the useful life. And the rise of smartphones opened up an opportunity that seemed vastly superior to blanketing the neighborhood in newspaper: offers could be personalized and targeted to specific demographic profiles. Coupons could be linked to a supermarket loyalty card, providing retailers with data on whether the coupons caused a shopper to switch brands.
Greg Parks is another coupon blogger who started after the Great Recession and wanted to supplement his income to support three children. Initially with newspaper clippings all over the floor, he now makes instructional videos exclusively with digital coupons that can be used nationwide instead of in a single distribution area.
“I like to say I’m a lazy couponer now,” said Mr. Parks. He’s also found that digital coupons reduce the evil eye from cashiers when they have to process a stack of paper.
“Some of them act like we’re stealing or taking something from them,” said Mr. Parks. “You don’t want to deal with all those paper coupons, they’re such a headache. With digital, everything is automated.” (While only 5 percent of coupons distributed are digital, they account for about a third of all coupons redeemed, according to Inmar.)
However, Mr. Parks is on the high end of coupon user sophistication. Many of the people who depended most on printed coupons — older, fixed-income shoppers — may not have the computer or smartphone savvy to take on the digital version. dr Dhar, a professor at the University of Chicago, said the move to digital hit the wrong demographic.
“That’s not the population that uses coupons – they don’t use digital media very often,” said Dr. Dhar, who recalls surviving on vouchers as a graduate student in Los Angeles 30 years ago. “A lot of this is not driven by response to coupons. It’s fueled by coupons that aren’t reaching the right people.”
Certainly, manufacturers haven’t given up on the sheer reach of physical coupons. The free-standing insert still functions as an advertising vehicle: in fact, the ideal outcome for a manufacturer is for a shopper to see a coupon and then go to the store to purchase the item without redeeming it.
A sudden shock
While coupons have been slowly dying for years, the pandemic has dealt a hard blow.
Seemingly overnight, the disorganized supply chains and back and forth from office to home left consumers desperate to buy whatever they could get their hands on; Brand preferences went out the window. When inflation started to rise last year, not only were retailers struggling to keep shelves stocked, they weren’t even sure they could keep prices stable until coupons expired.
“The last thing these manufacturers want to do is give them more incentives because that will only fuel demand,” said Spencer Baird, interim CEO of Inmar. “That’s what we hear all the time: ‘We’ve got a budget, we’re ready to go, but until we get my fill rate where it needs to be, I don’t want to mess up my supply chain.’ ”
The use of even digital coupons fell for the first time in 2020 before recovering. While most of these are tied to a specific retailer, the coupon industry is working toward a universal standard that will allow shoppers to redeem digital coupons at any retailer that signs up.
But there’s no guarantee retailers will stick with coupons when other incentives become more popular.
Lisa Thompson works for Quotient, a company formerly known as Coupons.com, which began in 1998 as a website that allowed coupons to be printed out rather than cut out. The company issues printable coupons, and the Coupons.com app already mostly offers cash back promotions instead.
“Honestly, it’s a dying form of saving and we know it,” Ms Thompson said. “I worked a lot with the marketing team to make ‘Coupon’ sound sexy.”
Many dedicated couponers still prefer the old-fashioned route.
“I agree, it sinks and eventually it will die,” Ms. Cataldo said. “I’m not looking forward to that. But it’s not happening nearly as fast as they thought.”