Digital coupons find redemption in the stay-at-home economy

Photo: Getty Images
Aug 31, 2020
Tom Ryan

Digital coupons in the U.S. surpassed redemptions of paper coupons for the first time during the second quarter, according to Inmar Intelligence.

The milestone was highlighted in an article in a Wall Street Journal article that detailed digital marketing shifts made in recent months as online purchases have accelerated in the stay-at-home economy.

Walgreens, according to the article, suspended its print circulars to shift to online-only and saw digital redemptions climb about 80 percent this year. CVS has extended the coupons that come with its in-store receipts online.

For grocers, eliminating or reducing print coupons can be a major money saver. Digital coupons promise to deliver more relevant offers based on a shopper’s purchase history versus those distributed in newspapers based on ZIP codes. Further, a personalized digital coupon can be delivered to a shopper in 24 to 48 hours versus six to eight weeks for one heading to a mailbox.

Artificial intelligence (AI) also promises to take coupon targeting to another level. Jason Mathew, head of insights & personalization at Symphony RetailAI, told Grocery Dive last October, “Trying to strategically address areas where you see gaps in customer purchasing patterns across the different departments in the store is one way to move customers in the right direction, from the retailer’s perspective.”

However, Valassis’ “2020 Consumer Intel Report” based on surveys from the fourth quarter of 2019 and a follow-up in June 2020 found that, while the popularity of digital coupons continues to increase, “consumers still rely heavily on paper coupons, and they continue to account for the largest share of coupons distributed and redeemed.”

Among Valassis’ findings:

  • Seventy-one percent of shoppers use print coupons, down from 77 percent in the 2019 survey and well off the recent peak of 93 percent in 2018;
  • Seventy-three percent use digital coupons, up from 67 percent in 2019;
  • Sixty percent use both print and digital coupons, up from 53 percent in 2019;
  • While they plan their shopping, 40 percent look for printed coupons, 34 percent look for digital coupons or discounts, 25 percent read store emails, and 26 percent use a store’s mobile app.

DISCUSSION QUESTIONS: Are consumers increasingly shifting to digital coupons or being conditioned to expect both digital and print coupons? Will digital coupons still need to provide more value to convince the majority of grocery shoppers to make the full switch?

Please practice The RetailWire Golden Rule when submitting your comments.
"Digital coupons offer a convenience that is just not possible with paper coupons."
"There are many strong stories of retailers who have eliminated circulars with minimal to no margin impact while significantly reducing marketing expenses."
"It will be a while before a brand manager doesn’t use an FSI to boost sales of a product."

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18 Comments on "Digital coupons find redemption in the stay-at-home economy"

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Bob Phibbs

When I buy something online and I see a place for a coupon code, I’d be a fool not to do a quick search for a coupon. Or use Honey to automatically find and use one. Does that mean these work? No — consumers are savvy, why aren’t marketers? I’ll bet most had already made up their minds like me and just got the deal, they didn’t change the behavior.

Kathleen Fischer

Digital coupons offer a convenience that is just not possible with paper coupons. This, combined with the ability to use without physically handling a coupon plus the cost savings and environmental benefit in not having a printed coupon, point towards the benefits of using and offering digital coupons.

Bob Amster

We said repeatedly that the COVID-19 pandemic has changed some paradigms permanently. The pandemic has also exposed many heretofore in-person shoppers to the wonders of e-commerce and other consumer-centric technology. All paper coupons should disappear in fewer than three years. They are costly. They are unwieldy (please recall my post on CVS’ 37.7-inch-long paper receipt). They are easy enough to lose. They can convey a sense of “so twenty minutes ago” about the retailer itself. The industry has been espousing the replacement of the wallet and almost everything else with the smartphone. Replacing the paper coupon with its electronic younger sibling is imminent.

Dr. Stephen Needel

With paper coupons, I can buy a product almost anywhere – digital coupons are (today) generally limited to a single retailer. I don’t see us walking away from paper for some time to come.

Bethany Allee

The surge in digital coupon usage is related to the surge in digital shopping platform usage. Consumers are lazy – they’re going to use what is at hand (pun intended). As long as digital platforms continue to grow, digital coupon usage will grow and print coupon usage will diminish.

Michael La Kier

The downfall of print has been as widely reported as the downfall of physical retail. Neither are going away, we are just shifting usage as a society. It all comes down to ease of use and convenience. Just because it’s more expensive to print vs deliver digitally does not mean shoppers prefer digital. This is another case of “know your shopper” and deliver on those needs. “Both” is the answer for the foreseeable future.

Brandon Rael

At this stage, leading retailers have already integrated their loyalty, digital coupons, and manufacturer coupons within their native apps. While COVID-19 may have become the great accelerator of digital commerce, retailers that were ahead of the curve have integrated all elements of loyalty and coupon engagement and removed any friction points in the experience.

In turn for all the loyalty and coupon engagement, retailers have an opportunity to gain valuable insights about their consumers and can provide more personalized experiences.

Michael Terpkosh

The combination of mobile device technology, the pandemic and increases in online shopping have made digital coupons a great option for consumers and retailers. Digital coupons are easier and cheaper to create, plus digital coupons are faster to get to consumers. All of this adds up to a very nimble way to create incremental consumer purchases.

Richard Hernandez

I believe COVID-19 is driving customers to use digital coupons instead of handling paper coupons. This will lead to a faster acceptance on the consumer front.

Perry Kramer

The shift from print coupons to digital coupons will continue to grow. The challenge for retailers will be to make the coupons relavent, easy to find, and seamless for the consumer to redeem. Many retailers have built a model where coupons are an “addiction” for the consumer who is waiting to shop until that once-a-month offer for a product is delivered in some media format. For the average consumer who has over 30 apps on their phone, making the coupons easy to use is the trick. For all generations, for many reasons, if it takes more than a minute to find the coupon it is a bad experience. Browsing through hundreds of coupons on your phone to find the one you want is not going to drive sales. There are many strong stories of retailers who have eliminated circulars with minimal to no margin impact while significantly reducing marketing expenses.

Rachelle King

This shift to digital coupons is reflective of the current dynamics in retail shopping; online shopping is growing so it makes sense that online coupons would grow too. However, it’s unlikely there will be a hard switch to digital vs. paper coupons. Most consumers are omnichannel shoppers and will simply look for coupons that are available in whatever channel they happen to be shopping in the moment.

Still, this new normal has certainly increased the visibility of digital coupons and has accelerated consumer adoption. Now that consumers are aware of how easily digital coupons can be redeemed, they will continue to use them but when it’s safe to stroll the store aisles again, they will be looking for paper coupons as well.

For retailers with loyalty programs or load-to-card options for coupons, this is an opportunity to drive adoption of paperless coupons, regardless of which channel customers are shopping.

Ralph Jacobson

Baby Boomers must be the last generation that uses print coupons. That’s not a scientific study, just my observation. Everyone has always wanted “a deal” on everything they buy, and the convenience of digital coupons makes the shopping experience painless.

Bindu Gupta

A significant percentage of shoppers still seem to be using both digital and print coupons. If retailers focus on personalizing the digital coupons, shoppers might reduce their usage of print coupons. A good strategy could be to increase the provision of digital coupons while cutting down the print coupons gradually.

John Karolefski

Print and digital promotion activity declined in H1 2020 as brand manufacturers and retailers adjusted their coupon strategies in response to COVID-19. But reports of the death of FSIs are greatly exaggerated. Print coupons will still be with us post-pandemic. Old habits are hard to break and new ones take time to acquire. It will be a while before a brand manager doesn’t use an FSI to boost sales of a product. And shoppers are not ready to forgo FSIs completely in favor of a digital offer.

Peter Charness

Coupons were supposed to influence consumers to buy something that may not have been on their list, or if it was listed, to buy brand B instead of brand A. As indicated digital coupons may end up being an incentive to discount a decision that was already made. Well at least they don’t clutter up the counter for weeks, until they end up in the car, seasoning in the sun for a few weeks more, while I go into the store without remembering them. That’s an improvement.

Ricardo Belmar
Ricardo Belmar
Retail Transformation Thought Leader
7 months 14 days ago

I suspect most consumers are developing a preference for digital coupons when available/ And that’s the key. Paper coupons can come from a product manufacturer and be useable anywhere. The equivalents to this in digital form are still too clunky to use regularly apart from the coupon code box on e-commerce checkouts. And even those don’t always produce the desired effect consumers want. Until a seamless platform presents consumers with a digital coupon they can use ubiquitously, paper coupons will remain, even if in diminished numbers.

Scott Smith

We should really look at the definition of “digital coupon” in at least two different ways. A coupon that is redeemed through an online or in-app order, and a coupon that is redeemed in-store that lives on the user’s device. These are two completely different experiences and cater to a dramatically different persona and audience. Each solves problems that occur in the different scenarios, and each can provide similar value propositions in terms of contextual relevance.

A digital coupon in a physical world has only begun to provide value to the user. Using contextual triggers like time of day, location, real-time updates, etc. all need to be strongly considered.

Additionally – a single use digital coupon that is tied to a uniquely identifiable user ID provides unprecedented value to the retailer on a consumer’s buying behaviors. Then using that data to make each message even more valuable to the shopper — that’s the power.

Kim DeCarlis

The shift to digital coupons cannot be ignored, particularly with growing user bases of Rakuten and Honey, and most recently Amazon Assistant. But digital coupons are a double-edged sword. They can be injected on your site by a competitor — disrupting your customers’ path to purchase by offering an identical or similar product on another site for less. Particularly with the shift to online purchases in the work-from-home economy, e-commerce retailers must ensure they can both block distracting ads from appearing on their site, yet allow good ads that increase conversion and average purchase value.

"Digital coupons offer a convenience that is just not possible with paper coupons."
"There are many strong stories of retailers who have eliminated circulars with minimal to no margin impact while significantly reducing marketing expenses."
"It will be a while before a brand manager doesn’t use an FSI to boost sales of a product."

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