WNAT'S IN STORE?

What's the future of couponing? There are some things to consider, and a lot of "on the other hands." But I have no dramatic conclusions to offer. On the other hand:Efficient Consumer Response will undoubtedly have an effect on coupons. One of the key initiatives of ECR is efficient promotions, and part of efficient promotions is efficiencies in the distribution, redemption and clearing of coupons.

What's the future of couponing? There are some things to consider, and a lot of "on the other hands." But I have no dramatic conclusions to offer. On the other hand:

Efficient Consumer Response will undoubtedly have an effect on coupons. One of the key initiatives of ECR is efficient promotions, and part of efficient promotions is efficiencies in the distribution, redemption and clearing of coupons. Another implied, but very real, part is to develop new ways to "distribute" paper coupons, and yet another is to "replace" paper coupons. Another trend that may affect coupons is the growth of club stores, because a lot of the clubs don't accept coupons. But then Wal-Mart and Kmart will also pick up a lot of the traditional supermarket volume, and these retailers do a huge volume in coupons. Home-shopping companies also accept coupons. Coupon redemption was down by 12% in 1993, in terms of absolute number of coupons. Reasons for the decline include a reduction in the number of coupons "distributed" (they're down). According to NCH Promotional Services, a change in distribution is the No. 1 reason for a change in redemption. Another reason for the decline is a change in the level of consumer confidence (it's up), and a reduction in the number of days for which coupons are valid (down, also, to 3.1 months). Shorter expiration dates have a direct effect on redemption because they leave coupons in consumers' hands for shorter periods of time. Coupons distributed electronically in-store, according to CMS, increased more than 50% in 1993, although they still make up less than 1% of total distribution. This increase in in-store electronically distributed coupons should offset some of the decline in redemption because they are redeemed at a much higher rate than coupons distributed in freestanding inserts: 8.5% to 13%, compared with FSI redemption of 2.1%. New electronic devices will be developed over the next few years, which may show even greater redemption rates.

Front-end electronic marketing (also known as frequent shopper) is continuing to expand. A recent study by my company showed that 21% of the supermarket companies in the United States now have these programs in at least some of their stores. A recent study by NCH showed that 16% of the U.S. population carries some kind of frequent shopper card. Every one of these programs provides "instant discounts," also known as "clipless coupons." One would assume that these programs would cause a reduction in paper coupon redemption, but another study by NCH showed that 77% of the consumers who use frequent shopper cards use coupons at the same time. But then, category management is starting to take hold. On the manufacturer side (internally), category management means that sales and marketing will be working more closely together. If they get good at it, maybe we won't see products promoted in frequent shopper programs and in FSIs at the same time anymore.

My guesses as to what will actually happen to coupons? I think they'll decline, eventually. And the ones that exist will be cleared electronically. But it appears that we're going to have paper coupons around for quite some time.

Carlene A. Thissen is president of Retail Systems Consulting, Chicago.