Now in Vogue

By Dec 01, 2009

It’s official: It is now cool to clip coupons. Coupon redemption declined steadily between 1999 and 2006, when the number of coupons people turned in leveled off at 2.6 billion. It stayed there through 2008. However, if the first half of 2009 is any indication, coupon use may be on the rise for the first time in at least 17 years.

Brands pushed out 188 billion coupons, a 20% increase over the first half of 2008, and people redeemed 1.6 billion, a 23% jump. Marketers are also offering better deals, increasing the face value to $1.41 and extending expiration periods 10%, to 2.7 months, according to promotions logistics firm Inmar.

“It’s really driven almost exclusively by the economy,” says Matthew Tilley, director of marketing at Inmar. “It has worsened in a way we haven’t see in a while, and there is a new frugality in the consumer mindset. Coupons are really front and center in that way of thinking.”

The stormy economy has people focusing on bargains at the supermarket, where consumer packaged goods companies invested heavily in coupon promotions and 64% of redemption took place. Of the 1.6 billion coupons distributed during the first half of 2009, 1.05 billion (up 23%) were for food, while 550 million (up 15%) were non-food related. Redemption for non-food coupons skyrocketed to 46% during the 2009 second quarter from just 9% in the first quarter. Food coupon redemption increased to 27% from 22%.

A direct correlation can be seen between the rise in unemployment, which began in 2008, and coupon use. “As consumers are less confident, they are more likely to use coupons,” Tilley says.

As consumers redeemed coupons in big numbers during the first half of 2009, marketers began pushing tactical levers to dampen the high redemption rates to control costs. Those levers include shorter redemption time periods and reduced face values — while still increasing distribution.

“If a promotion is going to get 15% to 20% more redemption, it’s going to cost 15% to 20% more,” Tilley says. “It’s a double-edged sword. Marketers want redemption, but you want to do it in a way that’s cost effective.”

Not surprisingly, the Internet — while still a very small slice of the pie — is the top growth method for coupon distribution, growing 92% in the first half of 2009 with 308% growth in redemption.

Free-standing inserts continue to lead distribution (89.2%), followed by in-ad (1.8%), magazine on-page (1.7%), electronic checkout (1.3%) and direct mail and handout, both at 0.9%, according to Inmar. Lining up with those figures, consumers most often redeem coupons clipped from FSIs (51%), followed by electronic checkout (10%) and instant redeemable (9%).

Losing ground as distribution methods are handouts, down 12%, in-ads, down 11%, and on-pack, off by 71%.

Inmar projects that coupon redemption will reach 2.9 billion in 2009, a 14% increase over 2008.

The broad segments using coupons are older consumers, people with families, and blue-collar workers. However, a segment of the increase in coupon use is younger, single consumers who have never used them before, Tilley says.

Why People Clip

Some 37.4% of consumers said they are clipping more coupons than last year because they needed to stretch their budgets, 19.5% said gas and food prices had increased and 17.6% indicated they liked to save money. Another 7.7% indicated that more coupons were available.

For those who said they used less coupons, 16.7% they didn’t have time to clip, 16% reported not needing or using the products being offered and 11.5% said they couldn’t find the coupons for the products they wanted to buy. Another 9% reported the coupons expired before they had a chance to redeem them and 7.6% said the saving were not significant enough to bother.

The regularity of clipping is increasing with 77% reporting regularly clipping in 2009 versus 75.8% in 2008 and 63.6% in 2007.
Source: 2009 NCH Consumer Coupon Use Survey

Coupon Stats:

Year 2008 First Half 2009
Distribution 317 billion
188 billion
Redemption 2.6 billion
1.6 billion

Source: Inmar