Jill Cataldo is a coupon master.
She started eliminating them to save a dollar here and 50 cents there in the Great Recession, when she had two children in diapers and money was tight. She started with a training session at her suburban Chicago library, shared what she learned with others, and now has a syndicated column and website where she writes about coupon deals and other ways to spend less.
However, the pandemic turned Ms. Cataldo’s world upside down. The paper coupon inserts in the Sunday paper seemed flimsier. Even the increasingly popular digital coupons were hard to come by.
“There are brands that I’ve followed for over a decade that just aren’t issuing many coupons right now,” Ms. Cataldo said. “It’s a bit frustrating, because it’s something we’ve come 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 increase tremendously as a tool to help customers,” he said. Sanjay Dhar, a professor of marketing at the University of Chicago Booth School of Business.
But that tool is getting harder and harder to come by. In 2021, according to estimates by Kantar Media, 168 billion circulated, both in print and digital format. That was down from around 294 billion in 2015.
The shrinking coupon market includes not only the number of coupons distributed, but also the portion given at checkout. Redemption rates fell to 0.5 percent of all print and digital coupons in 2020 from around 3.5 percent in the early 1980s, according to a paper by economists at Harvard University, the University of Georgetown and the Heinrich Heine University of Düsseldorf.
Economists see a larger phenomenon: Increasingly time-constrained consumers don’t want to deal with even small hassles to save a few bucks on toothpaste.
“Declining coupon use and declining redemption rates indicate a fundamental shift in consumer purchasing behavior,” the authors wrote. They added: “We see this as further evidence that the decline in price sensitivity reflects a long-term secular trend.”
At the same time, mobile phones have made all sorts of other incentives possible, including cash back rewards, points that can be redeemed for store credit, and contest prizes.
“Professionals often want to get discounts to consumers in a transparent way,” said Eric Anderson, a marketing professor 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, like Ms. Cataldo’s readers.
“I don’t think from a consumer perspective they say, ‘Oh, we don’t care.’ We care,” said Ms. Cataldo. “It’s just that we have fewer tools right now to play with.”
A venerable incentive
The coupon industry as we know it began in the early 1970s when a Michigan printing company, Valassis Communications, began distributing discount booklets on specific products that could be redeemed at any store.
Valassis totaled the slips of paper and the manufacturer reimbursed the retailer for the discount. Soon, shopkeepers saw the value of coupons in driving traffic to their own stores and began their own newspaper inserts. The number of printed coupons distributed peaked in 1999 at 340 billion, while newspaper circulation also peaked, according to Inmar Intelligence, the other big coupon clearing company, along with Valassis.
But a drop in redemption rates had already begun. It’s hard to pinpoint why, but people close to the industry believe it’s related to the rise in two-income households, as more women entered the workforce. Ms. Cataldo remembers growing up in the 1980s, when she, she said, her mother enthusiastically used coupons.
“Back then it was a little bit of a different culture because we had a lot of stay-at-home parents who had time to do this,” he said. “It’s time that pays well, but you have to have that time, and if you work eight hours a day, you probably don’t.”
Voucher use enjoyed a resurgence during the 2007-9 recession, which left millions of people out of work for far longer and with far 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 got people in the act with promises of stackable discounts that could bring the cost of a shopping cart purchase close to steel.
But what delighted serious coupon shoppers dismayed manufacturers, who are focused on getting people to buy things they might not otherwise buy, without offering discounts to people who would buy the product anyway. That’s why brands began withdrawing promotions and limiting the number of coupons that could be used on a given trip.
At the same time, grocery stores and big box stores were under pressure from e-commerce platforms like Amazon. They responded by beefing up their store-brand offerings and asking companies like Procter & Gamble to lower prices on brand-name items.
“They want to get the best deals to be competitive on the shelf,” said Aimee Englert, who heads customer strategy for consumer packaged goods companies in Valassis, now part of a company called Vericast. “What that ends up doing is restricting the budgets that manufacturers have to pull levers, like to provide a coupon.”
As their leeway on discounts dwindled, brands wanted to make sure they were getting as many additional purchases from their promotional dollars as possible. The average value of the coupons was reduced, as was the time during 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 targeted to specific demographics. The coupons could be linked to a supermarket loyalty card, giving retailers data on whether the coupons enticed a shopper to switch brands.
Greg Parks is another coupon blogger who started in the wake of the Great Recession, looking to stretch his income to feed three children. Although he started with newspaper clippings all over the floor, he now makes instructional videos exclusively using digital coupons, which can be used across the country instead of a single distribution area.
“I like to say I’m a lazy coupon right now,” Parks said. In addition, he has noticed that digital coupons reduce dirty looks from cashiers when they have to process a stack of paper.
“Some of them act like we’re stealing or taking something from them,” Parks said. “They don’t want to deal with all those paper coupons, they’re a headache. With digital, everything comes out automatically.” (While only 5 percent of coupons distributed are digital, they account for about a third of all coupons redeemed, according to Inmar.)
Mr. Parks, however, is at the high end of coupon user sophistication. Many people who relied more on paper coupons (older shoppers on fixed incomes) may not have the basic computer or smartphone skills to adopt the digital version. Dr. Dhar, a professor at the University of Chicago, said the shift to digital hit the wrong demographic.
“That’s not the population that uses coupons, they don’t use digital media very much,” said Dr. Dhar, who recalls surviving on coupons 30 years ago as a graduate student in Los Angeles. “A lot of this is not due to the response to coupons. It’s because the coupons don’t reach the right people.”
To be sure, manufacturers haven’t abandoned the sheer scope of physical coupons. The stand-alone insert still functions as an advertising vehicle: in fact, the ideal outcome for a manufacturer is for a shopper to see a coupon and then go to the store to buy the item without redeeming it.
a sudden jolt
If coupons had been slowly dying for years, the pandemic has dealt a heavy blow.
Seemingly overnight, turbulent supply chains and the office-to-home shake-up left consumers desperate to buy anything they could get their hands on; Brand preferences went out the window. When inflation started to skyrocket last year, retailers not only struggled to keep shelves stocked, they weren’t even sure they could hold prices steady until coupons expired.
“The last thing those manufacturers want to do is give them more incentives because it will drive demand even higher,” said Spencer Baird, interim CEO of Inmar. “This is what we hear all the time: ‘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 plunged in 2020, for the first time, before recovering. While most of them are tied to a specific retailer, the coupon industry is working on a universal standard that will allow shoppers to redeem digital coupons at any retailer that signs up.
But there’s no guarantee retailers will stick with coupons, when 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 coupons could be printed instead of clipped. The company is phasing out printable coupons, and the Coupons.com app already offers mostly cash-back promotions.
“Honestly, it’s a dying form of savings, and we know it,” said Ms. Thompson. “A lot of my job has been working with the marketing team to make ‘coupon’ sound sexy.”
Many dedicated couponers still prefer the old way.
“I agree, it is sinking and at some point it will die,” Ms Cataldo said. “I’m not expecting that. But it’s not happening as fast as they thought.”