Promotions slowly return, but many retailers, brands fail to connect efficiently with consumers
This imbalance not only is costing retailers sales, but also holding back return on investment in marketing and promotions that miss the mark and potentially sacrificing consumer loyalty, Vericast reveals in its new 2021 Deals & Coupons Report published today.
Based on an online survey of nearly 2,000 people, Vericast found 60% of shoppers are looking for more coupons, discounts and deals to offset higher prices, and 31% say they are using more coupons, discounts and deals than last year.
Topping the list of deals and coupons for which consumer are searching is groceries, which 76% of affluent shoppers with household incomes of more than $100,000 listed as highly influential. This edged out restaurants, which was listed as influential by 72% of affluent shoppers, travel (63%), home furnishings (62%) and amusement or entertainment venues (57%).
Promotions hindered by supply constraints
Some retailers and manufacturers likely are struggling to meet consumer demand for coupons and promotions because of supply chain constraints.
For example, earlier this week United Natural Food International president Christopher Testa said manufacturer-led promotions can only come as fill rates improve, and that isn’t happening consistently.
“We didn’t see steady improvements in our inbound supplier fill rate up until the summer, and then the summer months it started to decline for all the macro issues that I am sure everybody is aware of – raw material shortages, especially in bottled beverages, labor, freight and so forth,” he explained.
He added the warning that “the fill rate is going to continue to be a headwind on the promotional activity.”
These comments echo those of Albertsons’ CEO Vivek Sankaran, who noted during the company’s first quarter earnings call this summer that promotions are hard to offer because they are hard to fulfill.
He explained that promotions are holding steady over the last few quarters, but generally are down because supply is inconsistent – making it harder to offer typical promotions on items like soda, beer, Gatorade, nuts and more.
Rebalance rewards, coupons to get in front of the right audience at the right time
But even when retailers and manufacturers are able to offer promotions in the current environment, Vericast found their coupon distribution and redemption trends aren’t adding up.
According to the survey, 93.8% of promotional spending goes to free-standing inserts and 6.2% go to all other media. But only 30.8% of consumer are saving from free-standing inserts and 69.2% come from other media – a complete inverse.
The difference is particularly stark in digital paperless, which accounts for 33.2% of savings but only 3.4% of investment, and in direct mail, which accounts for 8% of savings but only 1.2% of spending.
“The conventional coupon balance is out of sync with new behaviors,” Vericast notes in the report.
So, what do consumers want? Vericast found 36% want paper and digital coupons and discounts, 33% want offers that are exclusive to them and reward their loyalty and 25% want offers tailored to their timing when they are ‘in the market’ to make a purchase.
Link coupons to loyalty
With a third of consumers already open to coupons and deals that reward their loyalty, Vericast reinforces its recommendation to link the two by noting that 40% of consumers feel more positively towards brands that offer discounts or coupons and 30% say they will be more loyal to that brand.
“The increased demand for value presents an opportunity for marketers to rapidly build loyalty, repeat business and customer recommendations,” Vericast notes. It adds this will become even more important as the holiday season nears and consumers feel even more financially pressed.