Paperless coupons are gaining momentum as the Kroger Co. adds to its growing list of loyalty card-based promotional offers.
Just last month, the Cincinnati-based retailer launched an online coupon catalog from Unilever. Located on the “coupon” section at kroger.com , the catalog currently includes about 14 coupons for such brands as Hellmann's, Ragu and Wish-Bone. They range in face value from 40 cents off any Hellmann's product to $1.50 off a Bertolli frozen meal kit. The average expiration date is one month.
Powered by Brisbane, Calif.-based SoftCoin, a consumer goods promotion firm, the Unilever coupons can be downloaded for free to Kroger loyalty cards and redeemed automatically at the checkout. A maximum of 25 coupons can be loaded onto a card at one time.
The new Unilever catalog joins two other Kroger paperless coupon programs: the seven-month-old “P&G eSaver,” also run by SoftCoin; and AOL's two-month-old Shortcuts platform, which currently has offers from Kraft, General Mills and Kimberly-Clark.
Kroger is also reportedly pursuing digital partnerships with other manufacturers, as well as a program with Cellfire in which coupons can be downloaded to cell phones.
Kroger views paperless coupons as a way to build customer loyalty by saving them time and money, Ken Fenyo, the retailer's corporate loyalty vice president, said in a statement.
Fenyo referred SN's questions to Kroger spokeswoman Meghan Glynn, who said customer response has been very good.
“Customers who go online to plan their meals find it very convenient that they can load the coupons directly to their Kroger Plus cards,” Glynn told SN.
Kroger still values traditional coupons because they remain popular with other segments of its customers. It also still supports print-at-home Internet coupons. Currently, 60-70 offers can be printed from a “coupon center” on the Kroger website.
Digital coupons, however, give its shoppers another savings option, said Glynn.
“We recognize that more and more of our customers are going online,” she said. “This makes the couponing part of their shopping experience a little easier.”
Marc Shaw, Unilever's director of integrated marketing, agreed, saying that while traditional freestanding inserts still have a place in couponing, digital coupons meet the demands of today's time-pressed, tech-savvy consumers.
“This is where the world is going,” said Shaw, citing the airline industry's movement from paper tickets to e-tickets as an example.
Digital coupons, Shaw said, complement Unilever's other marketing efforts and reach a broad range of shoppers.
“We're hoping to appeal to all different types of consumers,” Shaw told SN.
Kroger shoppers have already downloaded about 1.5 million coupons to their loyalty cards via the P&G and Unilever efforts, according to SoftCoin's chief innovation officer, Stan Roach.
Roach declined to say how many of these have been redeemed.
By year-end, six manufacturers will be using SoftCoin's paperless system at Kroger, according to Roach.
He attributes manufacturer interest to the system's ease of use for the consumer.
“What makes this unique is that consumers pick coupons, and within an hour they're integrated at the point of sale,” Roach said. “There's no paper involved.”
P&G's current eSaver offers range from 25 cents off any Downy product to a buy-one, get-one-free offer for Ivory soap.
P&G and Unilever's digital coupons are currently being tested exclusively at Kroger, but three to five other retailers may start offering them by year-end, according to Roach.
Early results show that digital coupons provide an incremental reach, as “a substantial percentage” of those who download the Kroger coupons are not traditional coupon users, said Roach.
“They're younger, busier and value the ease and convenience of the electronic method of picking and saving time with coupons,” he said.
Since the system is loyalty-card based, it gives Kroger a new level of targeted marketing capabilities. For instance, in March, Kroger started using the technology to offer personalized coupons based on past coupon usage and personal profile forms. That means that each time a shopper returns to search for coupons, she is offered a coupon for a product she is likely to want.
“It's a way for retailers to leverage their loyalty card and market basket data to drive purchases and get incremental reach,” he said.
Kroger shoppers are responding so well that about 100,000 loyalty-card holders have already signed up for Shortcuts, according to Shortcuts Executive Director Sharon Baker.
“We have great engagement and activity among consumers,” said Baker. “They love how easy it is to use and save money.”
To obtain a Shortcuts coupon, consumers register their loyalty cards for free at shortcuts.com . They can then search Shortcuts coupons by brand, product or category. Once they see an offer they like, they click on it, and the savings are added to their loyalty card. They can print out a shopping list to remind them of the offers they've chosen. Coupons are automatically applied to their purchases at the checkout once they scan their loyalty card.
Kroger currently has 18 Shortcuts offers, up from eight when the program launched two months ago. Kimberly-Clark, Kraft and General Mills are the current vendor partners. Other manufacturer partnerships are in the works.
Offers range from 40 cents off Yoplait yogurt for kids to $2 off Huggies diapers. Other participating brands include Ritz crackers, Green Giant frozen vegetables, Honey Nut cheerios and Betty Crocker cake mix.
Baker said redemption rates are in the high teens, but declined to elaborate.
Only coupons from national-brand manufacturers are offered digitally at this time, but Kroger may soon include private-label offers via Shortcuts, according to Baker.
Like the SoftCoin initiatives, Shortcuts enables Kroger to reach a diverse group of consumers. Consumer data shows that Shortcuts is being used not only by traditional coupon users — moms and heads of household — but also other key population segments, including men and high-income households.
“The rates of these groups using Shortcuts is significantly higher than what you would see in traditional coupon usage,” she said.
Kroger is the only retailer to partner with Shortcuts so far, but other retailer partnerships are in the works, according to Baker.
Indeed, while Kroger is lending national support to digital coupons, regional players are also getting involved.
Giant Eagle in Pittsburgh jumped on the digital coupon bandwagon late last year when it launched e-Offers, powered by News America Marketing's SmartSource iGroup direct-to-card (D2C) program.
E-Offers are available to those who enter their loyalty card at a link at gianteagle.com . Once they see an offer they like and click on it, the coupon is loaded for free onto their Giant Eagle Advantage Card. The offers are automatically redeemed at checkout.
A total of 20 offers are allowed on a loyalty card. More space becomes available when offers are redeemed or expire.
One of the main goals of the program is to build customer loyalty by increasing the benefits of using store cards, according to Giant Eagle.
Another reason for offering electronic coupons is that it virtually eliminates any chance of coupon abuse, since each coupon is linked at the UPC level.
E-Offers helps customers keep track of which coupons they have on their card and when they expire.
Paperless coupons are becoming such a hot topic that coupon redeemer NCH Marketing Services in Deerfield, Mich., just added them to its coupon database. It already handles traditional coupons as well as Internet-based, print-at-home coupons.
“Manufacturers are looking to us to clear them as you would any other type of coupon,” said Charles Brown, NCH's vice president of marketing.
Brown said increased interest in paperless coupons is not surprising at a time when consumers are increasingly using the Internet to get promotional offers.
About 0.4% of the 285 billion consumer packaged goods coupons distributed last year to consumers were Internet-based, print-at-home coupons, according to an NCH couponing study. While that represents a small base, it's up about 80% over last year, according to Brown.
“It's been growing by big leaps and bounds over the last five years,” he said. NCH could not provide statistics for digital usage, since it just started tracking this.
Likewise, due to the growth of the digital coupon industry, the Association of Coupon Professionals, Des Plaines, Ill., launched a Digital Coupon Redemption Task Force in December. AOL is one of about 30 participating companies. Mobile coupon provider Cellfire is another member.
The goal of the task force is to develop industry guidelines and best practices, according to John Morgan, ACP executive director.
Shortcuts' Baker said the ACP has given her the opportunity to learn from others.
“It's important for us to be part of the ACP, because this is so new to us — and this gives us a forum to have a voice and share information,” she said.
“We're committed to moving the industry forward and modernizing it,” she added.