Coupons registering more interest from consumers

Capital Region residents are increasingly turning to coupons to dull the impacts of soaring inflatio

Over the course of their 53-year-old marriage, Charles and June McLoughlin developed a partnership: She clips the coupons. He buys.

As inflation pushes food prices higher, the Charlton couple is finding their clipping routine becoming a more important aspect of their relationship. The practice, which traditionally starts with the delivery of their Sunday newspaper, saves the McLoughlins $15 to $20 monthly.

“We’ve always used [coupons], but we pay attention more now because prices have gone up considerably,” said Charles “Chuck” McLoughlin, who was shopping Tuesday at the Hannaford supermarket in Glenville with his wife.

With or without a spouse’s help, Capital Region residents are increasingly turning to coupons to dull the impacts of soaring inflation, the rate of which hit 5 percent in June. That spike marked the fastest annual increase of the U.S. Consumer Price Index since 1991.

After declining for 15 years and then flattening out over the past two years, U.S. coupon redemptions are poised to increase for the first time since 1992, retail experts said.

Finding higher food and energy prices eating away stagnant wages, consumers are scrambling to find ways to preserve their buying power. While consumers’ options for lower gas prices are scant, they are finding more wiggle room with grocery bills.

Created in 1895

For consumers not wanting to trade premium brand products for store brands or shop down at discount centers, there remains the coupon: the 1895 creation of Asa Candler, the wholesale druggist who purchased the Coca-Cola formula. Candler used the redeemable slips to offer free drinks of his new soda.

“As the economy has softened, the coupon use has increased,” said Mona Golub, a spokeswoman for the Price Chopper supermarket chain, based in Rotterdam.

Between May and July, the number of coupons redeemed at Price Chopper stores increased 0.7 percent compared with the same period of 2007. During that period, the value of those coupons increased 1.7 percent.

Strong redemption growth from in house-produced coupons contributed to Price Chopper’s gains during its fiscal first quarter. In March 2007, the chain installed in supermarkets kiosks that distribute sheets of coupons to Price Chopper AdvantEdge Card holders.

U.S. coupon use is most robust in the grocery category, which posted a 6 percent annual increase in redemptions, or 100 million more redeemable slips, according to Valassis Communications, a Libonia, Mich., marketing services firm that produces Redplum coupon packets.

However, increased coupon usage has spread out of the supermarket checkout line. Hoffman Development Corp., the Albany owner of the Hoffman Car Wash chain, saw an increase of up to 5 percent in coupon redemptions during the first half.

“We’ve seen [coupon redemptions] increase slightly. But in our world, because [the redemption rate is] so high, it’s significant,” said Hoffman Development President Ron Slone.

Hoffman mostly distributes coupons through direct mail services, pennysaver advertisements and newspaper inserts. Slone said sales for Hoffman’s car wash ticket booklets, which offer cleanings at a discounted price, are also at their highest level ever.

“People are looking for a way to cut back. They’re going to have to look hard at food, gas and heat this winter,” said Douglas Lonnstrom, the founding director of the Siena Research Institute in Loudonville.

An SRI survey released earlier this month highlights how more price-conscious New Yorkers have become this summer. Throughout New York last month, 81 percent of consumers said food prices had become a somewhat or serious problem, up 9 percentage points from June. Looking forward, 60 percent of New Yorkers were bracing for higher food prices.

Those economic jitters could give a further boost to coupons. Their popularity had waned among consumers amid changing shopping habits, declining newspaper readership and the emergence of demographics not accustomed to the clipping habit, according to Matthew Tilley, a spokesman for CMS, a Winston-Salem, N.C., firm that provides promotional management services for 715 consumer product manufacturers.

Change in direction

During the first half of 2008, U.S. coupon redemptions were flat at 2.6 billion. Redemptions remained at roughly that level throughout 2006 and 2007, even though an 8 percent decline had been projected. The nation’s worsening economic outlook for the second half, which traditionally is a stronger period for coupon usage, could give redemptions a boost.

“I really think at the end of the year I would expect to see an uptick,” said Tilley.

CMS said the nation’s economic downturn was largely responsible for halting coupons’ decline. It also noted retailers have maintained confidence in the redeemable slips and continue to distribute 300 billion of them annually, a figure that has held steady for the past five years.

“This kind of environment is really an opportunity for marketers to use coupons to attract price-conscious customers away from competitors,” Tilley said.

Although consumer product manufacturers have not significantly altered the terms of coupons, they are promoting them more aggressively. After redemptions peaked in 1992, in the wake of a national recession, manufacturers shortened the expiration dates of their coupons. Manufacturers often also required the purchase of two or more of the item being promoted, rather than just one.

However, the average face value of a consumer packaged-goods coupon rose to $1.23 last year from 60 cents in 1992, according to Charles Brown, the vice president of NCH Marketing Services, Valassis’ coupon clearing division.

Who’s using them

A July study by Scarborough Research ranked the Albany/Troy/Schenectady area as having the 12th-highest concentration of coupon-clipping households in the nation. The New York-based shopping pattern research firm said 34 percent of Albany area households use grocery coupons at least once a week.

Milwaukee topped Scarborough’s list, with 40 percent of its households regularly clipping coupons. Santa Fe, N.M., ranked last at 14 percent. Rochester ranked third, followed by Buffalo, which tied for fourth place with five other metro areas.

Scarborough, a joint venture between Arbitron and The Nielsen Co., said metropolitan areas with high coupon-clipping households tend to have higher-than-average Sunday newspaper readerships.

During the six-month period ending March 31, the Albany Times Union added 118 subscribers to its Sunday edition, bringing it to 141,064. The Sunday Gazette’s circulation shrank 3.8 percent to 46,356, according to the Audit Bureau of Circulations, the world’s largest circulation auditing organization.

Despite shrinking circulations, newspapers continue to dominate the coupon distribution market. According to Scarborough, 53 percent of households obtain coupons from Sunday newspapers, up 4 percentage points from 2005. During that period, the number of households obtaining coupons from the Internet rose 5 percentage points to 11 percent.

It remains unclear whether coupons will manage to maintain their popularity after consumer prices stabilize or the nation pulls out of its economic downturn. It largely remains up to manufacturers whether another 15-year slump lies in the future for coupon redemptions.

“If the manufacturers continue to offer coupons and make them attractive to consumers, then consumers will continue to redeem them,” Brown said.

Categories: Business

Leave a Reply