Amazon-Whole Foods deal could speed the decline of paper coupons
- Under Amazon’s ownership, Whole Foods will likely offer price matching, digital coupons and guaranteed low pricing rather than traditional paper coupons and circulars, according to experts interviewed by CNBC.
- Coupon redemption dropped 4% last year, while the average value and overall volume of coupons fell as well, according to coupon processing company Inmar.
- Last year was the first year that digital coupon redemption topped traditional coupon redemption, according to data from Inmar.
Paper coupons comprise the majority of the 2.2 billion redeemed last year, according to Inmar. However, load-to-card coupons, which shoppers can apply directly to loyalty cards, saw a 20% increase in usage between 2015 and 2016, per Inmar data. Coupons clipped from the Sunday newspaper dropped 10% in redemption rates.
Retailers like digital coupons for several reasons. They’re cheaper than paper, they integrate with mobile apps and web platforms, and they reach a younger shopper base. According to shopper marketing firm Valassis, nine out of 10 millennials use coupons, and a growing number are redeeming them through digital channels. Other consumers are coming around to digital coupons because they’re easy to use — often applied automatically at checkout — and they’re often personalized to their shopping preferences.
With its price matching and guaranteed low prices, Amazon, like Walmart, has played a major role in the decline of traditional coupons. Experts speculate the company will keep this focus with Whole Foods, and that this could speed the decline in paper coupon use as the company draws more customers and other retailers emulate its approach.
It’s hard to imagine tech-first Amazon investing in paper coupons. But the company has never run a grocery company before and may need to employ them to reach loyal customers. Whole Foods, which only recently began offering digital coupons, also offers mailers and other traditional coupons. In New York City, for instance, Whole Foods recently sent out three “$20 off $100” coupons that can be used throughout the summer. These offers are a key part of Whole Foods’ strategy to gain new customers and retain its most loyal ones.
Ultimately, Amazon’s price-lowering strategy wouldn’t happen overnight, so in the short term the company will likely keep Whole Foods’ coupon strategy intact. Once it does lower prices, it can expect more value-minded shoppers to come to Whole Foods, including those who like clipping coupons. If Amazon is going to ultimately do away with these offers, it’ll need to effectively market its digital coupons and pricing strategy to reassure these and other customers.
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