As prices skyrocket, coupons are harder to find than ever
Jill Cataldo is a master of coupons. She began cutting them out to save a dollar here and 50 cents there in the Great Recession, when she had two children in diapers and money was tight. Starting with a training session at the library in her Chicago suburb, she shared what she learned with others, and now has a syndicated column and a website where she writes about coupon deals and other ways to spend less.
The pandemic, however, upended Cataldo's world. Paper coupon inserts in the Sunday newspaper seemed flimsier. Even increasingly popular digital coupons were hard to come by.
“There are brands that I've followed for over a decade that are just not issuing a lot of coupons right now,” Cataldo said. “It's kind of frustrating, because it's something we came to count on for a long time.”
Now the steepest rise in the cost of living in four decades is making bargains even more coveted. “With inflation, this is what should go up tremendously 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 ever harder to come by. In 2021, Kantar Media estimates, 168 billion circulated, across both print and digital formats. That was down from about 294 billion in 2015.
The shrinking coupon market includes not just the number of coupons distributed but also the share turned in at checkout. Redemption rates declined to 0.5% of all print and digital coupons in 2020 from about 3.5% in the early 1980s, according to a paper by economists at Harvard University, Georgetown University and Heinrich Heine University Düsseldorf.
The economists see a larger phenomenon: Increasingly time-strapped consumers don't want to deal with even small hassles to save a few dollars on toothpaste.
“The declining use of coupons and the declining redemption rates indicate a fundamental shift in consumer shopping behavior,” the authors wrote. They added, “We view this as additional evidence that declining price sensitivity reflects a longer-run secular trend.”
At the same time, mobile phones have made all kinds of other incentives possible, including cash-back rewards, points that can be redeemed for store credit and contest prizes.
“Practitioners often want to get discounts to consumers in a seamless manner,” said Eric Anderson, a professor of marketing at Northwestern University's Kellogg School of Management. “It's not clear that traditional coupons do this.”
A venerable incentive
The couponing industry as we know it started in the early 1970s when a Michigan printing company, Valassis Communications, began distributing booklets of discounts on particular products that could be redeemed at any store.
Valassis would total up the slips of paper, and the manufacturer reimbursed the retailer for the discount. Soon, grocers saw the value of coupons in driving traffic to their own stores, and began newspaper inserts of their own. The number of print coupons distributed peaked in 1999 at 340 billion, as newspaper circulation also crested, according to Inmar Intelligence, the other large coupon settlement company, alongside Valassis.
Coupon use enjoyed a resurgence during the recession of 2007-09, which left millions of people out of work much longer and with much less financial assistance than they would receive during the pandemic recession a decade later. “Couponing” became a widely used verb courtesy of the reality show “Extreme Couponing,” which brought people into the practice with promises of stackable discounts that could bring the cost of a shopping cart's worth of purchases close to zero.
But what delighted serious couponers dismayed manufacturers, which are focused on getting people to buy things they wouldn't otherwise, not giving discounts to people who'd buy the product anyway. That's why brands started pulling back on promotions and limiting the number of coupons that could be used in a given trip.
At the same time, grocers and bigbox stores were coming under pressure from e-commerce platforms like Amazon. They responded by beefing up their store brand offerings as well as asking companies like Procter & Gamble to lower prices on namebrand items.
As their wiggle room on discounts shrank, brands wanted to make sure they were squeezing as many extra purchases as possible out of their promotion dollars. The average value of coupons shrank, as did the time over which they could be used. And the rise of smartphones provided an opportunity that seemed far superior to blanketing neighborhoods with newsprint: Offers could be personalized and aimed at specific demographic profiles. Coupons could be linked to a supermarket loyalty card, which gave retailers data on whether the coupons prompted a shopper to switch brands.
Many people who depended most on print coupons — older shoppers on fixed incomes — may not have the computer or smartphone literacy to adopt the digital version. Dhar, the University of Chicago professor, said the switch to digital hit the wrong demographic.
“That's not the coupon-using population — they don't use digital media very much,” he said. “A lot of this isn't driven by the response to coupons. It's driven by coupons not reaching the right people.”