evidence that American consumers are in trouble just keeps piling up. Sales
are falling off a cliff for big-ticket items like houses and cars. Businesses
that depend on discretionary spending, such as casual dining restaurants, are
reporting that turnover is waning. Cut-price retailers like Wal-Mart are
gaining share at the expense of higher-end stores. And as the following
report, "Cutting Costs with Online
Coupon Sites," from BusinessWeek's Catherine
Holahan reveals, an old favorite from austere times is making a comeback.
that offer money-saving discounts are enjoying a resurgence in the current
economy, as consumers surf for bargains
Coupons are making a comeback.
In the face of rising food prices and a slowing economy, consumers are
clipping coupons once again. Only, they don't need scissors and a local
newspaper so much as a computer, printer, and maybe a mobile phone.
The number of page views on Web
sites that feature money-off coupons for all manner of consumer products
surged 38%, to 281 million, in March from a year earlier, compared with 5%
for the Internet as a whole, according to comScore. Those visitors spent a
total of 145 million minutes on the sites, a 37% increase. While the number
of new users to coupon sites isn't growing faster than the larger Internet
audience, existing coupon site users are certainly becoming more active.
"User engagement by deal-seekers appears to be ramping up," says
comScore analyst Andrew Lipsman. "As a general rule, something like
online coupon site activity would increase as a result of macroeconomic trends."
Individual sites say they're
detecting increased use. Coupons.com and RetailMeNot.com say they have seen
large traffic spikes in the past three months. Visitors to Coupons.com, a
decade-old site that lets users print coupons that can be redeemed in stores,
grew 35% in the first three months of 2008, compared with the prior quarter,
says the site's CEO, Steven Boal. Typically, quarterly growth averages 22% to
23%, he says. Similarly, RetailMeNot says its growth for February, which typically
slows after the holiday shopping season, is already back at December levels.
"There is definitely an increased use of coupons across the board,"
says RetailMeNot co-founder Guy King.
Fueling the traffic growth are
rapid increases in food prices (BusinessWeek, 5/1/08) and signs of economic
slowdown that are damping consumer sentiment and prompting consumers to hunt
for bargains. Costs of staples such as rice have surged in recent months,
reflecting rising fuel prices and in some cases, limits on exports. Some
analysts also blame government policies that provide incentives for farmers
to devote more crops to biofuel production (BusinessWeek, 5/1/08).
Bargains Via Computer or Cell Phone
In recognition of the rising
demand for bargains and in hopes of luring cash-strapped consumers, retailers
are making coupons more readily available online. In April, Coupons.com
featured more than 120 coupon offers from the retailers that distribute
coupons on its site or use its technology to offer discounts on their own sites,
Boal says. Typically, the number is about 100. "Coupons move products
off the shelf," he says. "That is their No. 1 job."
Digital coupons typically work
in two ways. On Coupons.com, store owners create coupons, with unique serial
numbers, that can be printed and redeemed in stores. Coupons can also have
unique promotional codes that shoppers can use on e-commerce Web sites to
receive discounts on online purchases. RetailMeNot lets users post and share
such digital coupons on its site.
Retailers are also relying on
wireless technology to capitalize on consumers' bargain-hunting tendencies.
According to a recent report by Juniper Research, retailers will send as many
as 3 billion mobile coupons to wireless phone users by 2011, resulting in $7
billion in discounts redeemed.
Consumer Pain, Coupon Gain
It hasn't always been a given
that consumers would warm to online coupons. After the circulars tucked
between newspaper sections began disappearing, coupons began surfacing
online. But the time involved in finding coupons and the cost of the ink to
print them seemed to negate much of the cents in savings. Coupon sites have
taken off as more consumers have become motivated to look for even small
discounts to reduce ever-increasing grocery bills.
The commodities price hike has
caused everyone from boxed cereal giants General Mills and Kellogg to meat
producers such as Tyson Foods (TSN) to hike prices. More price increases are
to come. After reporting a $5 million loss in its second quarter on Apr. 29,
Tyson CEO Richard Bond said prices will continue to rise.
Consumer pain is turning out to
be coupon sites' gain. Coupons.com provides retailers with coupon-marketing
and -serving technology. The more consumers printing and using their coupons,
the more retailers are likely to work with the site. RetailMeNot sells ads on
its site through Google and collects commission from the coupon-driven
traffic to retailers' Web sites such as Amazon.com. "The net effect is
that people are trying to get the most of their shopping through
coupons," says King.
By : Michael J. Panzner
Editor, Financial Armageddon
Michael J. Panzner is a 25-year
veteran of the global stock, bond, and currency markets and the author of Financial Armageddon: Protecting
Your Future from Four Impending Catastrophes, published by Kaplan Publishing.