Double Coupons Fading as Promo Tactic
In Favor of Digital Offers 

By John Karolefski

Double coupons are fading from the marketplace. The latest evidence comes from California where grocery chains Vons and Ralphs recently discontinued their policy of doubling the discounts that brand manufacturers provide on paper coupons. While there aren’t hard statistics to back up the trend, knowledgeable coupon experts recognize a change in tactics.  

“There is less ‘bonus couponing’ across the U.S. today than there was years ago,” reports Charles Brown, Vice President, Marketing for NCH Marketing Services, a Valassis Company

“Grocers are moving away from the non-targeted, non-customer-specific type promotions like double coupons,” reports Richard Thibedeau, Executive Vice President of Operations for Intelligent Clearing Network, which electronically validates and clears paper and digital coupons in real time at the POS in grocery, drug and mass merchant retailers

Some supermarkets in competitive markets have doubled coupons for years as a way to keep loyal shoppers or to lure them away from other stores. Retailers often have limits on such programs, such as a specific day of the week, only up to a specified value, excluding coupons distributed in the store, or excluding specific product categories. Retailers pay for the amount they double coupons for. Manufacturers will reimburse them only for the face value of the coupon.

“Double coupons are no longer giving some stores enough of an edge that it’s prudent for them to continue the program,” says Rachel Singer Gordon, a coupon analyst and author of The Complete Idiot’s Guide to Couponing, “Sometimes, in order to afford double coupons, stores end up needing to increase overall prices to make up for the double coupon costs they are eating. This makes them less competitive to non-couponers or casual couponers, compared to neighboring grocers. This gives the perception that their prices are high and gives an edge to the low-cost competitors popping up all over.

“Supermarkets are feeling the pinch of the extended economic downturn as well as increased competition from everyone from Walmart to dollar stores,” she goes on to say. “They have to take a hard look at where to cut costs. As they watch competitors discontinue double coupons with few long-term repercussions, this provides them an incentive to follow suit. We’ll probably see this trend continuing in the foreseeable future.”

If that’s the case, won’t consumers leave stores that discontinue double coupons and shop where they still double?

Jill Cataldo, who speaks with shoppers all the time, thinks so. The founder of Supercouponing.com says “The very enthusiastic shoppers who have had double coupons available for a long time” will definitely switch stores to keep the extra benefits.

Chakravarthi Narasimhan Ph.D., a professor of marketing at Washington University in St. Louis, agrees. “But if other stores start seeing a drop in traffic, they may think about retaliating.  If everyone stops doubling, I suspect that other factors such as assortment, price, and convenience would drive loyalty.”

Then there is a middle ground, which is taking place in markets like Tucson, Ariz., reports James Tenser, principal of VSN Strategies. “Some supermarkets have recently applied alternate policies to attract shoppers, such as rounding up all manufacturer coupons with face values of less than $1 to a full dollar at the checkout. Safeway has done this here in Tucson, for example. I expect this presents a more moderate exposure for the retailer compared with doubling everything, while still generating some shopper excitement,” he says.

Brown of NCH Marketing has also seen some retailers change their tactics around coupons. One driver has been a shift in overall pricing and promotion strategies, such as a retailer changing from high-low to everyday-low pricing. Another reason is the advent of digital marketing in various coupon formats that are retailer specific.

“For example, some retailers are targeting coupon loyalists with print-at-home coupons on the retailer’s website,” he said, “Or offering paperless coupons that can be downloaded to the retailer’s frequent shopper program, or activated via a unique consumer ID utilized at POS. Mobile-enabled coupons are yet another new way retailers are marketing with coupons. And behavior-based targeting of retailer-specific coupons in either paper or paperless formats is being used successfully as a collaborative retailer and manufacturer technique to motivate consumers. With momentum growing in these new methods of attracting and retaining coupon shoppers, some retailers may decide they no longer need to offer {double coupons}.”

Abandoning double coupon in favor of various electronic loyalty programs is the way that progressive retailers will be competing in the future, predicts Paul Kramer, CEO of CatapultRPM, a consultancy. He points out that Vons is part of Safeway, which recently launched the Just for U digital savings program, and Ralphs is owned by Kroger, whose highly-successful loyalty program is powered by analytics from dunhummby, the well-known firm.  

“They’re investing millions of dollars into these loyalty programs,” he says, “which in fact are much more effective in terms of targeting value to the consumer because of the POS data. So I’m able to target my most valuable consumers with high-value offers. It’s a much more effective way to do it than to use double couponing.”  

He used the example of flooding a market with double coupons for diapers. Why do that when the offers are available to shoppers who don’t have babies? A targeted loyalty program, he says, can deliver the offers only to those households with babies.

“With the digital media explosion going on,” says Thibedeau of Intelligent Clearing Network (ICN), “the ability to communicate promotions to a specific consumer is increasing rapidly. Grocers could lose control trying to manage and deliver all the combinations of digital and traditional paper coupons a particular consumer has chosen. This is what is most concerning to the brand manufacturers. Their worst nightmare is a consumer redeeming multiple digital and paper coupons against the same product, eroding their margins and wasting their promotion dollars.

“POS technologies struggle to keep up with the volume and different types of promotions creating a ‘deal stacking’ nightmare,” he explains. “Solutions like ICN can manage the multitude of digital and paper coupons a consumer may want to redeem in a particular transaction and deliver the best value to the consumer, the grocer and the brand manufacturer all at the same time.”

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