Shoppers Migrating to Digital Coupons over FSIs 

By Jack Grant 

Shoppers are showing increasing preference for digital promotions, says a new study. Analysis of 2016 coupon activity by Inmar reveals an ongoing “promotional transposition” with paperless, digital coupons beginning to overtake traditional paper coupons in popularity.

Inmar's analysis shows that, among the more than 2.2 billion coupons redeemed by shoppers last year, the share of redemption captured by offers that shoppers load directly to their retailer loyalty accounts (Load-to-Card) grew 20 percent between 2015 and 2016. In comparison, share of redemption for paper coupons found in the Sunday newspaper (Free-Standing Inserts) fell 10 percent over the same period.

Meanwhile, Inmar’s shopper behavior research finds shoppers reporting – for the first time ever – that they use Load-to-Card (L2C) offers more often than coupons found in Free-Standing Inserts (FSIs) or store circulars. Inmar says this activity is continuing confirmation that shopper behavior is irrevocably changing – with convenience becoming an increasingly important factor in determining whether shoppers engage with coupons.

The fact that L2C coupons reached a record redemption rate of 6.2 percent in 2016 demonstrates further how shoppers – demanding that marketers simplify their saving experience – are actively responding when brands and retailers provide easy-to-acquire and immediately relevant offers. Last year also marks the fifth consecutive year of double-digit growth in redemption share for L2C coupons.

“The marketplace is seeing change at an increasing rate,” says Inmar Chairman and CEO David Mounts. “Brands and retailers must reformulate their engagement strategies if they are to successfully motivate digitally driven shoppers. And the effort must be inclusive,” adds Mounts. “Promotions must be personalized and highly relevant. Content must be authentic and originate from sources that shoppers trust.”

Though still largely reliant on traditional promotion methods, marketers are beginning to ramp up their digital offers in response to growing shopper demand; distribution volume for L2C offers grew by 22 percent in 2016. In comparison, distribution volume for FSIs, which accounted for 90 percent of the 307 billion coupons distributed in 2016, was down 3.3 percent compared to 2015.

Marketers were also more conservative with their promotions in 2016 as the total volume of offers distributed in the marketplace decreased by 4.3 percent compared to 2015. At the same time, the average face value for coupons distributed was down 5.6 percent to $1.64. (That's about a dime less in savings per coupon than last year.) Still, shoppers were given the same amount of time, on average, to use their coupons with redemption periods holding steady at two months.

Regardless, coupons are still flowing through checkout. Even as low unemployment, a stable economy and less-rich offers helped pull down overall coupon redemption (-4.1 percent versus 2015), 89 percent of shoppers surveyed by Inmar reported using at least one coupon in the last three months of 2016.

Along with the savings benefit for shoppers, coupons are continuing to deliver real business benefit to their sponsors. Research for Inmar's latest Shopper Behavior Study found that among the 49 percent of shoppers who used coupons during their most recent shopping trip in the last three months of 2016, 31 percent said that coupons made them buy more of the promoted product. Twenty-nine percent of these shoppers said coupons accelerated their purchase of the product.

Inmar will be publishing details on these findings and reporting out on overall 2016 coupon activity in its annual Promotion Industry Analysis, scheduled for distribution in April. The analysis will be available for purchase online at the Inmar Insights Marketplace.

                                               Early March 2017