Coupon Use Gains Strength

Posted on by Chief Marketer Staff

Coupons are proving a powerful incentive for consumers struggling to make ends meet in a weak economy.

After dipping slightly during the first three quarters of 2008, redemption in the fourth quarter grew nearly 10% compared to the fourth quarter of 2007, the first jump in redemption since the early 90s, according to Inmar, a promotions transaction settlement provider.

Overall, consumers redeemed 2.6 billion coupons, the third year in a row at that level. Prior to 2006, coupon redemption had show steady decline. The peak year for coupon redemption was 1992, at the end of the last major recession, when 7.9 billion coupons were redeemed, the company reported.

“Consumers responded to the financial uncertainty, in part, by using more coupons,” Bob Carter, president of Inmar CMS Promotion Services, said in a statement. “When everyone started hearing reports of record unemployment, drops in consumer confidence and losses on Wall Street, coupon redemption volume started to go up.”

The 10% fourth quarter jump was largely attributed to a double-digit increase in the use of food coupons, although non-food coupon redemption also rose by nearly 10%.

Interestingly, the channels in which consumers redeemed coupons have change dramatically.

For years, nearly 70% of coupons were redeemed in conventional supermarkets,” said Jennifer Mauldin, president of Inmar Carolina Services Revenue Recovery Services. “But in 2008, the mass merchandiser channel saw a 15% increase in redemption overall, made up by a 20% increase in redemption for food coupons and a 13% increase in non-food coupons.”

Coupons redeemed in mass merchandisers now account for nearly 19% of all coupons redeemed while conventional supermarkets now account for less than 64% of coupon redemption.

Marketers have caught on and are pushing out more coupons. The number of coupons made available to consumers last year rose 5% to 317 billion, back up to levels from a decade ago, the company said.

“This high level of distribution, combined with a 9% increase in the average face value and a generally sour economy, make coupon offers more attractive to consumers than ever,” Carter said. “The question is whether or not consumers will continue to think so in the coming year.”

The numbers indicated that the trend continues. Consumers redeemed over 9% more coupons in January ’09 than they did in January ’08.

“While we can’t predict the future, it is safe to say that the traditional coupon is back in vogue for consumers,” Mauldin said. “Even if the economy turns a corner sooner than later, a combination of factors have put coupons back on the radar of many consumers and introduced some to them for the first time.”

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