Jill Cataldo is a master of coupons.
She started cutting them out to save a dollar here and 50 cents there in the Great Recession, when she had two kids in diapers and money was tight. She started with a training session at the library in her suburb of Chicago, shared what she learned with others, and now has a syndicate column and a website where she writes about coupons and other ways to spend less.
However, the pandemic turned Ms Cataldo’s world upside down. Paper coupon inserts in the Sunday paper seemed thinner. Even increasingly popular digital coupons were hard to find.
“There are brands that I’ve been following for over a decade that just don’t issue many coupons right now,” Ms. Cataldo said. “It’s a little frustrating because it’s something we’ve been counting on for a long time.”
The sharpest rise in the cost of living in four decades makes bargains even more coveted. “With inflation, this should skyrocket as a tool to help customers,” said Sanjay Dhar, a marketing professor at the University of Chicago’s Booth School of Business.
But that tool is getting harder and harder to find. In 2021, Kantar Media estimates, 168 billion were in circulation in both print and digital formats. That was less than about 294 billion in 2015.
The shrinking coupon market includes not only the number of coupons given out, but also the share surrendered at checkout. According to a paper by economists from Harvard University, Georgetown University and Heinrich Heine University Düsseldorf, the redemption rate fell to 0.5 percent of all print and digital coupons in 2020, from about 3.5 percent in the early 1980s.
The economists see a bigger phenomenon: Consumers who are increasingly pressed for time don’t want even the slightest effort to save a few bucks on toothpaste.
“The declining use of coupons and declining redemption rates indicate a fundamental shift in consumer buying behavior,” the authors wrote. They added, “We view this as additional evidence that declining price sensitivity reflects a longer-term secular trend.”
At the same time, cell phones have enabled all sorts of other incentives, including cash back rewards, points redeemable for store credit, and competition prizes.
“Practitioners often want to get discounts to consumers in a seamless way,” said Eric Anderson, a professor of marketing at Northwestern University’s Kellogg School of Management. “It’s not clear that traditional coupons do this.”
That explanation offers little comfort to people who have come to rely on coupons to keep their grocery costs down, such as Ms. Cataldo’s readers.
“I don’t think they’re thinking from a consumer perspective, ‘Oh, we don’t care.’ We care,” Ms. Cataldo said. “It’s just that we now have fewer tools to play the game.”
A venerable incentive
The coupon industry as we know it began in the early 1970s when a Michigan printing company, Valassis Communications, began distributing booklets with discounts on certain products that could be redeemed at any store.
Valassis would add up the pieces of paper and the manufacturer reimbursed the retailer for the discount. Soon, grocers saw the value of coupons in directing visitors to their own stores and started their own newspaper inserts. The number of printed coupons distributed peaked at 340 billion in 1999, as newspaper circulation also peaked, according to Inmar Intelligence, the other major coupon settlement company besides Valassis.
But a decline in repayment rates had already begun. It’s hard to pinpoint why, but those close to the industry think it has to do with the rise of the dual-income household as more women entered the workforce. Ms. Cataldo recalls growing up in the 1980s, when, she said, her mother enthusiastically used coupons.
“Back then, it was a bit of a different culture because we had so many stay-at-home moms who had time to do this,” she said. “It’s time that pays well, but you have to have that time, and if you work eight hours a day, probably not.”
Coupon use saw a resurgence during the 2007-2009 recession, leaving millions of people out of work for much longer and with much less financial support than they would receive during the pandemic recession a decade later. “Couponing” became a common verb thanks to the reality show “Extreme Couponing”, which put people into practice with promises of stackable discounts that could bring the cost of shopping cart purchases close to zero.
But what delighted serious couponers were manufacturers, who are focused on getting people to buy things they wouldn’t otherwise buy, and not giving discounts to people who would buy the product anyway. That’s why brands have started withdrawing promotions and limiting the number of coupons that could be used on a given trip.
At the same time, grocers and chain stores came under pressure from e-commerce platforms such as Amazon. They responded by bolstering their store brand offerings and asking companies like Procter & Gamble to lower the prices of branded items.
“They want to get the best deals so they’re competitive on the shelf,” said Aimee Englert, who leads customer strategy for consumer packaged goods companies at Valassis, now part of a company called Vericast. “What that ultimately does is limit the budgets manufacturers have to pull levers, like providing a coupon.”
As their leeway for discounts narrowed, brands wanted to make sure they squeeze as many additional purchases out of their promotional dollars as possible. The average value of coupons shrank, as did the time they could be used. And the rise of smartphones presented an opportunity that seemed much better than covering neighborhoods with newsprint: offers could be personalized and targeted to specific demographic profiles. Coupons can be linked to a grocery store loyalty card, which allows retailers to see if the coupons are prompting a shopper to change brands.
Greg Parks is another coupon blogger who started in the wake of the Great Recession and wanted to expand his income to feed three children. Although he started with newspaper clippings all over his floor, he now makes how-to videos using digital coupons only, which can be used nationwide rather than in a single distribution area.
“I like to say I’m a lazy couponer now,” Mr. Parks said. In addition, he has found that digital coupons reduce the dirty looks of cashiers when they have to handle a pile of paper.
“Some of them pretend we’re stealing or taking something from them,” Mr. Parks said. “They don’t feel like all those paper coupons, they’re so stubborn. With digital, everything just comes out automatically.” (Although only 5 percent of coupons distributed are digital, they account for about a third of all coupons redeemed, according to Inmar.)
mr. However, Parks is at the top of coupon user sophistication. Many of the people who relied most on printed coupons — older fixed-income buyers — may not have the computer or smartphone skills to adopt the digital version. dr. Dhar, a professor at the University of Chicago, said the move to digital hit the wrong audience.
“That’s not the population that uses coupons — they don’t use a lot of digital media,” says Dr. Dhar, who remembers living on coupons 30 years ago as a graduate student in Los Angeles. “A lot of this isn’t driven by coupon response. It’s powered by coupons that don’t reach the right people.”
To be sure, manufacturers have not abandoned the pure range of physical coupons. The freestanding insert still functions as an advertising vehicle: The ideal outcome for a manufacturer is for a shopper to see a coupon and then go to the store to purchase the item without redeeming it.
A sudden shock
If coupons had been dying slowly for years, the pandemic would have dealt a hard blow.
Seemingly overnight, churning supply chains and the pendulum from office to home left consumers desperate for everything they could get; brand preferences went out the window. When inflation started to pick up last year, retailers not only struggled to keep their shelves stocked, they weren’t even sure they could maintain stable prices until coupons expired.
“The last thing those manufacturers want to do is give them more incentives because it will increase demand even more,” said Spencer Baird, Inmar’s interim director. “This is what we hear very consistently: ‘We’ve got a budget, we’re ready to go, but until we get my fill rate where it needs to be, I don’t want to mess up my supply chain.’ †
The use of even digital coupons dropped for the first time in 2020, before picking up again. While most of these are tied to a specific retailer, the coupon industry is working towards a universal standard that will allow shoppers to redeem digital coupons at any retailer that signs up.
But there’s no guarantee that retailers will stick to coupons while other incentives are gaining popularity.
Lisa Thompson works for Quotient, a company formerly known as Coupons.com, which started in 1998 as a website where you could print coupons instead of cutting them. The company is phasing out printable coupons and the Coupons.com app already offers mostly cash back promotions instead.
“Frankly, it’s a dying form of saving, and we know that,” said Ms. Thompson. “A lot of my work I did with the marketing team to make ‘coupon’ sound sexy.”
Many dedicated couponers still prefer the old-fashioned way.
“I agree, it’s going down and at some point it’s going to die,” Ms Cataldo said. “I’m not looking forward to that. But it’s not nearly as fast as they thought.”
