Recent surveys, reports, research and the general old assumption that a shaky economy means coupons are ready to return. But over the past decade, the use of coupons has declined sharply, year after year, in good economic times and bad times. And then those surveys, reports, studies and estimates came to the conclusion that Couponing would be ready for a comeback … probably next year.
But what could happen in the end this year?
While some predictors’ coupling crystal balls may be vague, executives at the country’s largest traditional grocery chain say they are beginning to see it with their own eyes – the use of coupons is on the rise again.
Rodney McMullen, CEO of Kroger, told investors last week, “We’re starting to see those involved in customer coupons being a little more aggressive than ever.” He further reports that more shoppers are choosing to save money by buying Kruger store brands rather than more expensive brands. “So we’re starting to see the beginning of some behavioral changes,” McMullen said.
The latest official figures show that grocery prices have risen 7.4% since last year. And we probably haven’t hit the summit yet. “In 2022, home food prices are forecast to rise between 2.0 and 3.0 percent,” the USDA’s Economic Research Service reported.
So when every dollar is counted, many buyers who have moved away from clipping coupons in recent years are apparently finding them again as an attractive option.
They are also taking advantage of the deal, as the industry returns to a more general promotional cycle. “During the epidemic, there were some promotions that we didn’t do because there were some items that you couldn’t get the product from,” McMullen said. “And obviously, you don’t want to promote an item where you don’t have enough inventory to support the product. In some cases, that is still the case. But overall, our promotional activities are the same as they were before the epidemic.
You might think that a retailer like Kruger would be worried, more buyers would be clipping coupons, buying only when things were on sale and avoiding expensive brands. But Kroger is confident, because everyone has to eat. Even when grocers try to see every penny – they are still spending.
“What consumers are telling us is that they are changing their spending behavior outside of food rather than food,” McMullen said. “Eating at home is much more affordable than going to a restaurant. They are able to expand their budget in this way… and then they are able to receive personalized rewards and engage with us on promotional items and things like that. “
Gary Millerchip, Kroger’s chief financial officer, added: “Food inflation is definitely higher, which is obviously what we’re all focusing on, but inflation is now clearly higher across the economy. “Home meals are more interesting in helping me manage my budget and manage my dollars.”
So with the price of almost everything going up lately, it’s easier to cut costs somewhere other than the grocery store. Although easier said than done. McMullen acknowledged that “in order to increase costs, for the most part, they were passed,” which means that wherever Kroger felt increased costs, he passed those costs on to customers in the form of higher shelf prices. “But not in every case,” McMullen said. “We continue to invest in pricing in areas that are most important to our customers … What we’re trying to do is keep the balance of inflation and help customers expand their budgets as much as possible.”
What is bad for consumers is not necessarily bad for Kroger. The retailer’s stock price has reached an all-time high after reporting strong quarterly earnings last week. So Kroger executives and investors may not need to clip coupons – but with such earnings, they are more than happy to welcome buyers.
Photo source: Kroger