Couponing Is Setting New Records – And They’re Not Good

You’ve probably observed at some point that coupons just aren’t as good as they used to be. There seem to be fewer coupons available for the things you want to buy, fewer coupons in the format you want to use them, and just fewer coupons in general – all of which probably leads you to use fewer coupons than you used to.

And, as the newest statistics show – you’re not imagining it.

Inmar has released the results of its annual Mid-Year Promotion Industry Analysis, which takes stock of the state of the coupon industry halfway through the year. And it’s not great, by just about any measure. The number of coupons both offered and used had already been declining sharply. The latest figures show that not only has that trend not reversed – it’s accelerating.

First, there’s the matter of the number of coupons being offered. After years of holding relatively steady at more than 300 billion a year, that number went over a cliff last year, when only 267 billion coupons were distributed – an 11.7% decline, the largest ever recorded.

And so far, 2019 seems to be gunning for a new record. In the first half of the year, Inmar reports that 129 billion coupons were distributed, down a whopping 13.5% from this time last year. Typically, fewer coupons are offered in the second half of the year. So unless manufacturers defy history and suddenly start flooding the marketplace with coupons over the next several months, we could be on pace for another record percentage drop, ending with the fewest total number of coupons available in some 20 years.

Coupon redemption figures are even uglier. It stands to reason that as fewer coupons are offered, fewer coupons will be redeemed. But coupon usage is falling at an even faster rate than coupon distribution. Last year, 1.74 billion coupons were redeemed, down 15.8% from the previous year – the fewest number of coupons redeemed in more than 40 years.

So far this year, only 647 million coupons have been redeemed. That’s down a startling 28.5% from this time last year. At this pace, 2019 coupon redemption could see a record decline in percentage terms, and the fewest total number of coupons redeemed in more than half a century.

And just in case you’re looking for something else to add to the record books, last year, a minuscule 0.65% of all coupons distributed were actually used – an all-time low. So far this year, that figure is 0.5%.

There are a number of possible explanations for the declines. The economy is still doing well enough that more shoppers are foregoing coupons. Among shoppers who are actually interested in saving, more are using digital rebate apps in place of coupons. More shoppers are visiting places like ALDI that don’t accept coupons. More shoppers are buying store-brand products, putting the pinch on national brands who have fewer marketing dollars to devote to coupons. And marketers are increasingly turning to more targeted digital offers, getting the right coupon to the right shopper at the right time, instead of simply throwing billions of coupons against the wall and hoping something sticks.

In fact, for the past few years, the coupon industry has been able to point to the increasing popularity of digital coupons as a way of showing that clipping coupons isn’t passé – it’s just undergoing some changes. But now, even digital coupons apparently aren’t attractive or plentiful enough to temper the troubling trends in couponing.

Confirming a trend first reported by Kantar a few weeks ago, Inmar’s figures show that digital coupons’ rapid rate of growth is slowing down. So far this year, digital load-to-card coupons represent 1.8% of all coupons available and 15.7% of all coupons used. Both of those percentages are up from this time last year. But with fewer coupons being distributed and redeemed overall, a larger percentage of a smaller number doesn’t amount to much. Kantar found that the total number of available digital coupons was up 8.5% so far this year – down from what had been a huge increase of about 25% a year. And the total number of digital coupons redeemed has actually declined so far this year.

That could be partly because even digital coupons aren’t as good as they used to be. Digital coupons are lagging behind the average coupon when it comes to face value, purchase requirements and expiration dates. The average face value of digital coupons so far this year is $1.92, slightly less than the overall average coupon face value of $1.95. But digital coupons require more purchases to get the discount – an average of 1.76 units, as compared to the overall average of 1.54. And they expire faster – in 1.1 months as compared to the average coupon’s 1.7 months.

And digital coupons are also increasingly available for nonfood as opposed to food products. Surveys and redemption figures show that shoppers prefer coupons for food. But digital coupons’ shift toward offering more nonfood discounts echoes that of coupons as a whole – while half of all coupons redeemed are for edible items, only 28% of all coupons distributed so far this year are for food.

If you consider that coupons generally tend to fall out of favor when unemployment is low and consumer confidence is strong, then the decline in coupon distribution and usage isn’t alarming so much as it is a positive sign about the health of the economy. If we end up tumbling into a recession, that’s when we’ll find out if the decline in couponing is a temporary trend – or the new normal.

So it may be true that coupons aren’t as good as they used to be. But considering the alternative – things could be a whole lot worse.

Photo by rose3694