From Historic Low, Coupon Use Falls Even Further

It was kind of alarming news for coupon users – and coupon providers – when coupon use hit a historic low point last year. Now, several months into a new year, that trend doesn’t appear to be reversing any time soon.

According to new figures compiled by coupon processor and market research company Inmar, the coupon redemption rate fell even further in the first quarter of 2016. About 630 million coupons were redeemed in the first three months of this year, down 5% from the same period last year. That follows a 10% decline in the first quarter of 2015, and a 2.5% decline the previous year.

At this rate, last year’s historic low level of coupon use may not hold that title for long.

Part of the reason for the decline this year, may be that there have been far fewer coupons available. While the overall coupon distribution rate has held steady in the first quarter of the past several years, it fell precipitously this year. About 83 billion coupons were distributed through the end of March this year, down 14.5% from the same period last year.

So is the coupon industry in trouble? Are manufacturers not bothering to offer coupons, because they know we won’t bother to use them?

Well, that’s one way to look at it. Another way, is that redemption declined at a lesser rate than distribution did. So even though the numbers are down, we’re actually using a greater percentage of the available coupons.

And a greater percentage of those coupons aren’t being clipped from the Sunday newspaper. Digital load-to-card coupons continue to grow in popularity. Not too long ago, they represented a fraction of a percent of all coupons redeemed. This past quarter, they made up 3% of all coupons used, doubling their share from just two years ago.

After faltering in recent years, print-at-home coupons appear to be gaining back some ground. They now represent 3.8% of all coupons used, up from 3.1% in the first few months of 2015.

But newspaper insert coupons are still the most prevalent type of coupon available – year after year, they represent nearly 90% of all coupons distributed. Their share of the redemption rate, however, continues to decline, at the expense of digital offers. In the first quarter of the year, insert coupons accounted for just over a third of all coupons redeemed, down from nearly half just two years ago.

One reason that couponers are using fewer coupons, is that coupons just aren’t as good as they used to be. And that’s a trend that looks to be continuing too. The average face value of available coupons so far this year is $1.54, down a whopping 10.9% from this time last year. The average purchase requirement – that is, the number of products you need to buy to be able to use the coupon – has also risen by 8.2%, to 1.48 items per coupon.

So there’s little mystery as to why the coupon redemption rate keeps going down. Manufacturers certainly don’t expect that anywhere close to all of the coupons they make available, will ever be used. Nowadays, though, that’s becoming truer than ever.

At some point, coupon use may fall so low, that coupons may start getting better again, to help bring the redemption rate back up. For now, though, don’t get your hopes up. After years of extreme couponing sent the redemption rate soaring, coupon providers may now have that rate right where they want it – historic low or not.

Photo by StockMonkeys.com