One coupon company insists paper coupons are on their last legs. A major newspaper has all but declared them dead and buried. So has the coronavirus really killed off paper coupons forever?

In a word, no. “The paper coupon has been through wars, 9/11, pandemics – you name it, it’s seen it. And it continues to thrive,” Inmar Intelligence Chairman and CEO David Mounts told Coupons in the News. So, to borrow a famous phrase, he said, “the stories of the paper coupon death are greatly exaggerated.”

Each year, Inmar Intelligence crunches the numbers and analyzes the data, showing how many and what types of coupons are distributed and redeemed. And this year so far, it’s safe to say, has been unlike any that Inmar has seen in its 40 years in business. Disruptions caused by the coronavirus and lockdown orders have sent coupon distribution and redemption plummeting to historically-low levels. And for the very first time, in the second quarter of this year, consumers redeemed more digital coupons than paper coupons from that old standby, the free-standing insert (FSI) that’s most often distributed in the Sunday newspaper. 29.1% of all coupons redeemed from April through June were digital load-to-card coupons, while 26.5% were from FSIs.

That prompted the Wall Street Journal to declare last week that “clipping coupons is becoming a thing of the past,” in an article ominously headlined “Coupon-Clipping Fades Into History as Covid-19 Accelerates Digital Shift.” Digital coupon use surpassing newspaper insert coupon use represented a coronavirus-spurred inflection point, the article argued, finally “bringing a century-old couponing industry into the present.”

That’s an assessment shared by the CEO of Coupons.com parent company Quotient Technology, who predicted earlier this summer that “the printed coupon will be gone in 18 months.”


Turns out the truth is a little more nuanced than journalistic shorthand or industry hyperbole would suggest.

Ever since the introduction of digital load-to-card coupons, digital and FSI coupons’ share of overall coupon redemptions have been heading in opposite directions. Until 2013, Inmar’s figures show that digital coupons still represented just a fraction of one percent of all coupons redeemed, while FSI coupons remained the most popular, with 40% of all redemptions. Each year, though, as more retailers launched digital coupon programs, as more digital coupons became available, as smartphone ownership became more widespread and as fewer shoppers subscribed to the printed Sunday newspaper, the redemption mix became something of a zero-sum game – digital’s share steadily increased while FSI’s share decreased accordingly, until they finally met in the middle this year, and then digital came out on top for the first time.

So it was bound to happen eventually. But the fact that it happened in the middle of a pandemic doesn’t mean the coronavirus is what caused it, or that one form of coupon’s popularity means the other form of coupon is dead.

“The pandemic is certainly not going to be the item that kills the paper coupon,” Mounts said. “When you add all the types of paper media together, they still lead.” Indeed, in the second quarter of this year, digital coupons’ 29.1% share of all coupons redeemed means that more than two-thirds of all coupons redeemed were in some form of paper – not just from the Sunday newspaper, but also sent in the mail, printed on your store receipt, or distributed in the store via shelf displays or stuck on the product itself.

Still, Inmar expects digital coupon use to continue increasing by about 10% year-over-year, with FSI coupons decreasing at roughly the same rate, though it suggests that FSI coupon use could hold steady or even increase somewhat if the economy gets worse. “Digital will win over the long run, but I think we have several more years for this to play out,” Mounts predicted.

For now, though, even for digital proponents, a 29.1% share of the lowest level of coupon redemption ever seen in the modern era isn’t necessarily something to celebrate. A greater share of a lesser total is still a lower number, after all. Inmar calculates that 109.4 billion coupons were distributed in the first half of 2020, down 15.8% from the same time last year, accelerating the downward trend we’ve seen for years during what had been a strong economy, when the need for savings wasn’t as acute. Coupon redemption declined even more sharply, with only half a billion coupons redeemed in the first half of 2020, down 27% from the first half of last year, and less than half the total number of coupons redeemed at midyear just three years ago.

If the pandemic can’t be blamed for killing off paper coupons, it can certainly be assigned much of the blame for the steep decline in the number of coupons being offered and redeemed.

“We had a really big supply chain shock,” Mounts pointed out. “Products weren’t there, there was no reason to advertise or promote them, and so people just pulled back.” Shoppers bought what they needed, quit worrying so much about shopping around for deals, and retailers and manufacturers focused more on keeping the shelves stocked than they did on promoting or discounting their products. Once the supply chain stabilized and shelves became more reliably full again, ramping up paper coupon offers took time. Digital coupons recovered more swiftly, because “it’s a lot easier and faster to push a digital coupon into the market than it is to put a physical,” Mounts said.

And with shoppers spending more time at home, and having more time to browse a selection of more relevant digital offers, there’s been a greater adoption of digital coupons – since March, Inmar says enrollment in digital coupon programs across the top national grocery chains has more than doubled.

So there are competing forces at work. Overall coupon use has declined because fewer people have been shopping in stores, where paper coupons are accepted, while many who have been shopping in person are more concerned with getting in, getting what they need and getting out, instead of browsing the aisles and hunting for deals. Yet the pandemic that’s hampering coupon use has been accompanied by a recession, when coupon use historically soars. So as brands and retailers start issuing more coupons again to meet this expected increase in demand, coupons – of all kinds – could be poised for a comeback.

Already, Inmar has found that coupon use is rising after reaching its lowest point in May. “I think it’s fair to say it bottomed out. I would say that we are rebounding,” Mounts said. The reason is that “the industry is acting now. Some consumers were very active in the second quarter, but there was not enough content to meet their demand. We had a doubling of enrollments into digital programs, but an unsatisfactory experience in terms of the amount of content that they could discover. Now that the content is coming back and it’s discoverable, then everyone must act to stimulate the interest and to let the customers know, hey, we’ve figured this out, we’re back and we’re here for you.”

Ultimately, pandemic or otherwise, recession or not, Inmar Intelligence’s shopper surveys have shown that the need for savings, in the form most convenient to the individual shopper, is ever-present. “It doesn’t really matter the media type, whether it’s physical or digital, the consumers are going to be wanting that value,” Mounts said. “And the brands and retailers that are very focused on delivering that value in the media that the consumer wants… are going to be the ones that build loyalty through this cycle. And those customers will stay with them.”

So digital coupons overtaking newspaper insert coupons in popularity is a milestone that makes for some good headlines, and some overblown predictions. But it also allows for some genuine reflection in the industry about where things are, and where they’re headed. There will always be consumer demand for coupons, and the retailers and brands that cut back in the first half of this year appear to be recognizing and responding to that now.

It’s possible we haven’t seen the worst of the pandemic yet, or experienced the worst of the recession. But it seems that the worst is past for couponing. After hitting historic lows at a time when shoppers need savings more than ever – when it comes to the long-term popularity of coupons, there’s nowhere to go but up.

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One Comment

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