Volatility is the new normal

Inmar Intelligence | October 29, 2012

We all got a bit of good news a couple of weeks ago with the most recent jobs numbers. At 7.8%, unemployment is now at the lowest level we've seen in a few years. We've found that changes in unemployment are predictive of coupon redemption, explaining over 65% of the changes. So a decline in coupon redemption was expected … but not a 22.9% decline! But that's exactly what we got, with declines in redemption across both food (-22.3%) and non-food (-23.9) categories and with every major coupon distribution vehicle.

And then there's coupon distribution. For the first six months of 2012, the theme has been reduce, reduce, reduce with a 1.5% decline in the first quarter and a 7.1% decline in the second. But now, what was going down is coming up. Brands distributed more than 79.2 billion coupons in the third quarter, a 7.6% increase, largely driven by a 32.2% increase in coupon distribution for food categories (non-food saw a 5.1% decline).
Add to that the general volatility in the market: CPG prices are up according to Nielsen's latest Scantrack report, in-store promotion support is dropping (also according to Nielsen's Scantrack) and gas prices are all over the place.
It's just really hard to predict what's going to happen because things are changing rapidly and often in counterintuitive ways.
Looking ahead, volatility is likely to continue being the norm. We do anticipate ending 2012 with a net decline in coupon redemption, although the fourth quarter may be a bit better than the third has been due to the increase in coupons available. Coupon distribution will likely end up flat (no change vs. 2011) by year's end.
Have thoughts on this? Comment below or join the conversation in The Promotion Room on LinkedIn.