Consumers Turn to Digital Couponing to Combat Inflation

Even if consumers spend the same amount as they did in 2021, rising average selling prices (ASP) means consumers are purchasing less, or walking away with less items.

Gartner has been monitoring and surveying consumers regularly to keep a pulse on how consumers are changing their shopping habits to adapt to inflation. One trend we've recently observed is the return of couponing.

While the physical act of sitting at the kitchen table and cutting out coupons from the latest newspaper may have disappeared, the rise and utilization of digital tools such as price comparison and coupon tracking tools has replaced it. Now more than ever, consumers are turning to such tools to combat inflation.

We recently surveyed and asked the Gartner Consumer Community, "How has inflation impacted how you shop for things you need regularly (such as food, groceries, household products or personal care items)?". Across generations, more than 30% of consumers are utilizing digital price comparison and coupon tracking tools to combat inflation. We found that younger generations are more likely to increase their usage of digital tools compared to older generations (see below figure). In fact, almost 50% of Gen Z & Millennials are utilizing digital tools to track coupons. Couponing is not out of style.

Digital marketers need to consider how to address shifting consumer behavior related to inflation through reinvestment and focus into discounting. Associated tools should be highly reconsidered. Embracing digital tools related to price savings cannot be ignored.

Dedicated Digital Coupon Tracking Tools

Third party digital coupon tracking tools often fall into a brand's affiliate marketing strategy. Brands can partner with these tools through an affiliate network, paying a percentage commission on every sale driven by the tool. Most tools also offer content marketing sponsorships opportunities for features in their weekly newsletter, homepage, or app.

While marketers may worry that offering a discount through these partners could tarnish their brand perception or reward a customer who may already be planning to purchase, recognizing the utilization of these tools by target consumers demonstrates that consumers expect a discount and are seeking one to combat the impact of inflation. Participating will aide the initial conversion which could mean the difference of acquiring the target customer or not. Brands can take steps to limit the total amount of cash back a customer receive or number of coupon uses to ensure a customer doesn't associate couponing with the brand long term.

1. Rakuten (formerly eBates) offers cash back on purchases if consumers begin their shopping journey through one of their platforms (web, app, browser extension). They often feature percentage bonuses and exclusive offers in their app to encourage mobile browsing and shopping. Occasionally, they offer in-store discounts and offers.
2. Paypal Honeypromotes a web browser extension that alerts consumers about potential savings while they're shopping. Users automatically get cash back for their purchases if they activate the extension and can browse additional exclusive offers.
3. RetailMeNot offerscoupons for thousands of brands that can be accessed for digital redemption, as well as in-store physical redemption. They're often the first search result on google when searching for a specific brand and coupon.

Integrated Digital Coupon Tools & Features

Many payment, credit card and banking platforms have launched targeted offers. They utilize a consumer's first party spending data to surface relevant offers related to their past spending behavior. When consumers login to their associated accounts, they're presented with offers and can opt in to participate.

1. Paypal serves up offers customers can opt into and save within their app and website. If a user is signed into their account on the web, occasionally Paypal offers will pop up on partner sites they're browsing on. Brands can set the offer, timeline and target volume of redemptions they want to achieve when setting up offers. Paypal then determines who is a relevant target based on past spending.
2. Chase has created a section of their website and app to showcase offers to credit card members. Customers can opt in and link limited time spend offers to their credit card. They're automatically reimbursed for the offer instead of having to manually redeem it.

Brand Owned Digital Tools & Features

Best in class brands partner with digital tools to offer discounts but also build them into their owned platforms. Many surface coupons and offers exclusively to rewards or loyalty members as an added benefit or perk to the program.

1. Target built a category within their app for Circle rewards members to save relevant deals that they can unlock while they shop digitally or scan at the register while checking out in-store. Target uses past purchase history and first party data to tailor featured offers surfaced to customers. For example, if a customer regularly purchases baby items, they will see more baby product related deals.
2. Michael'sallows rewards members to clip coupons within their app and save them in a mobile wallet for redemption in-store or online. Members must sign in to access this feature. Michael's has been known for great physical coupons so translating the offering into digital while acquiring customers as rewards members is strategic for their customer data efforts.

A few related Gartner pieces to read:

• Marketing Budget Considerations for Retail CMOs Heading Into a Recession
• #Hashtags Podcast: Inflated Expectations: What You Should Know About Consumer Spending
• Inflation-Driven Cost-Cutting Strategies Put Consumer Sales at Risk

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