While many shoppers are used to whipping out their smartphones to search their favorite grocery store app for digital deals, or scan the web for discount codes, the world of coupons still looks strikingly similar to what your parents experienced years ago: Take a paper coupon to the register, hand it over to the cashier and look for the savings on your receipt. The good news is, the industry is in the process of rolling out some of the biggest innovations we’ve seen in decades.
As that happens, lawmakers nationwide are starting to take a look at how coupons are delivered to ensure equity for all shoppers. Manufacturers and retailers will need to understand the promise of innovation, while ensuring they are up to speed on potential legislative changes that could impact their businesses at the state and federal levels.
Let’s start with the Universal Coupon, (AI)8112. This is a monumental shift, allowing manufacturers to offer both paper and digital coupons that can be used in any store, are single-use, and validated at the point of sale through The Coupon Bureau. Once the coupon is validated, the customer receives their discount and the data is sent to a third party for immediate reconciliation.
It’s a win for shoppers because it allows them to take a digital or paper version of the coupon to any retailer thanks to the single-use code preventing the coupon from being shared multiple times. For the retailer, the win is rapid reconciliation. For manufacturers, the rewards are immense. The single-use code can dramatically reduce fraud and provide data to determine the success of a campaign. Because it’s electronically validated, it also creates processing efficiencies.
Another innovation, electronic clearing, is a more streamlined reconciliation process leveraging the retailer’s point-of-sale (POS) system. Shoppers present their coupon at point of sale – the POS system then creates and sends a digital file of the coupon and transaction details to a clearinghouse, which allows for faster clearing. The experience is the same for the shopper; the win for the retailer is they are reimbursed more quickly than traditional methods. It’s also a win for manufacturers who would no longer pay to ship paper coupons to a clearinghouse.
While the march toward digital seems inevitable, driven by shopper preferences as well as manufacturers, lawmakers in some states are taking a dim view of digital-only discounts. They argue digital-only offerings cut out shoppers who either don’t have access to the technology they need, or find it difficult to understand.
Case in point – a large grocery chain uses digital coupons within its store app. To get the discount, shoppers first need to “clip” and save the digital coupons, which has proven to be a confusing process for some less tech-savvy shoppers. Last year, legislation introduced in New Jersey requiring retailers offering digital coupons to make an in-store alternative available didn’t pass after opposition from business groups. The bill has been re-introduced this year.
Illinois, Massachusetts, Rhode Island, and Washington all have been considering similar legislation. A bill currently in the Washington state legislature would mandate all grocery shoppers automatically receive a discount on any digital coupon item, whether they present the coupon or not.
On the federal level, more than a dozen House members, spurred on by consumer groups, signed on to a letter delivered to the Federal Trade Commission in Fall 2023, asking the agency to open an investigation into any harm store-issued digital coupons might be having on consumers unable to access the discounts.
Legislators’ scrutiny of coupons illustrates their continued importance in marketing strategies. Research released by Capitol One in 2023 found nearly 178 million U.S. adults have redeemed digital coupons. The same survey found 86% of shoppers said they would be more likely to try a new business because of a coupon.
Manufacturers, their vendor partners, and retailers should monitor legislative efforts to understand how they might impact digital coupons. However, nothing proposed to date should stop brands or retailers from adopting either the universal coupon or electronic clearing, which allow for digital and paper coupons.
An industry not known for innovation is suddenly finding itself at the crux of major innovation offering benefits to manufacturers, consumers and retailers. Manufacturers and retailers may have to be more nimble to take advantage of technological advancements while at the same time remaining compliant with state laws. While change can be disruptive, what is happening now in the coupon industry represents some exciting steps forward, and highlights the value shoppers place on these promotions.
