In Promotions

We just released our third quarter coupon trends numbers and, honestly, the numbers caught me a little off guard.

For about a decade, coupon redemption was holding a pretty steady drumbeat, slightly down year over year.  Nothing major, nothing dramatic. You could pretty much set your watch by it. Then came October 2008 and everything changed. Since then, redemption, along with distribution, has been difficult to predict across the industry.

In this most recent period we saw coupon redemption drop by a startling 22.9%, compared to the third quarter of 2011. This fall in redemption ran counter to a 7.6 percent increase in distribution for the same period. A bit of a juxtaposition to be sure, but with distribution, in many cases, shifting away from some methods with high redemption rates (like on-packs) to methods with lower redemption rates, the disparity is not so difficult to understand. Still, this third-quarter increase — coming on the heels of a six-month pullback in distribution — is likely to buoy redemption in the fourth quarter.

Of course, improved economic conditions may also be to blame for some of the decline.  As consumers grow more optimistic about the future there tends to be a reduced gravitation toward promotions.  More specifically, we’ve found that the unemployment rate is predictive of coupon redemption.  Given that recent reports put unemployment at some of the lowest levels in the last couple of years, a drop in redemption is no surprise … but the size of the drop is another matter.

But this shouldn’t be interpreted to mean that consumers don’t want coupons or deals. While shoppers appear to be in a better mood lately, the economic realities are still pretty stark: underemployment remains comparatively high and the USDA predicts “food at home” prices to continue to rise. These conditions will continue to maintain coupons as a go-to resource in the long term.  According to a 2012 Nielsen survey of consumers, 41 percent report using coupons on most shopping trips, an increase of four points over 2009 — the heart of the Great Recession.

Looking ahead, the volatility is likely to continue and we’ll all be working to define “normal.” But, no one has to work in the dark. The tools and services are out there to help marketers monitor individual offer redemption, develop holistic and strategic promotion solutions, better understand shopper behavior and effectively leverage new technology like eCoupons. You just have to know who to ask.

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