Friday, December 19, 2008

Not All Shoppers are Equally Frugal, Not All Coupons are Equally Creative

For as long as I’ve known her, my one sister-in-law has been an amazing coupon user. I just never really noticed it. To me, coupons evoke images of my mother in the 1970s, with her little file box full of tabs for certain items (“household,” “dairy,” “paper products,” they read). She managed the shopping for a medium-sized family on a tight budget until the '80s, when coupon use was just her routine and not a necessity. But my mom’s bargain hunting was really focused on groceries and everyday items. My sister-in-law, on the other hand, had perfected the gift buying bargain well before the current economic climate put a damper on everyone’s holiday shopping.

Back before I knew it was possible, she was using online savings, bookstore coupons, and, most creatively, discounts. We once got a holiday package from Amazon with the sales slip accidentally left in: she had so many discounts and qualified for free shipping that the entire 3 foot box had cost her a total of $5.00. And the most interesting thing is that of all my relatives, she’s in the most comfortable financial situation, in the high upper income brackets. As another family member put it, “well, that’s probably why she’s got money and we don’t!”

Anecdotal evidence aside, it’s quite obvious that coupon use is going to go way up in the coming year. What’s less obvious are two things: one, who’s going to be the main users and two, what kinds of coupons and special offers will work to entice very reluctant consumers to spend. The answer to the latter is complex, since the markets are multi-faceted and the full extent of the economic downturn is still up in the air. It seems likely that people will be more drawn to bargains in stores where they already shop. It’s also likely that younger consumers, who have been a steady market but are now slowing down, will have to learn some thrifty shopping skills. Here’s some other useful information: Packaged Facts has a recent study that gives some depth to my sister-in-law story.

When it comes to money-saving coupons, the highest-earning segments are most active. Coupon penetration is at 69% of all households through the early part of this year, but 46% in households earning less than $25,000--and it jumps to 71% in families earning more than $75,000. Usage is highest among those working in such white-collar functions as management, finance and administration. Also intriguing: Smaller households use coupons more than larger ones.
On-shelf point-of-sale coupon dispensers in the supermarket have been one of the most successful programs, making my mother’s file box obsolete. Here’s a lesson to be learned from this, though: Rather than barrage consumers with endless paper deals for items they don’t need, retailer should use their data to target coupons to people based on their purchasing history and demonstrated needs.

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