1. Business

After five years of strong growth, coupon use sees decline in first half of 2012

Morgan Watts takes couponing seriously. She stocks up on coupons from the Sunday newspaper and keeps track of weekly buy-one-get-one deals at Publix. She wouldn't dream of buying toothpaste, razors or frozen chicken nuggets without a coupon. Ever. • Last year, clipping coupons saved her $1,600 and helped offset a trip to Europe. Overall, it chopped her grocery bill in half. • Lately, she's lucky to save 30 percent.

"To me, that's awful," she said. "My goal is to see a 50 percent savings at the bottom of my receipt. It has dropped dramatically."

The 29-year-old newlywed from Tampa blames the decline on shorter expiration periods and tighter redemption rules. A Pringles coupon that used to promote a dollar off three cans now requires her to buy four. And those Dove coupons she loved to match with BOGO deals? They seem to always expire before the soap goes on sale.

Watts' observations are right on the money. Manufacturer coupons aren't as attractive as they used to be. Shoppers redeemed so many that brands had to scale back promotions because they were costing too much. In short, coupons became too successful.

The latest figures prove the point. Redemption is down 11 percent for the first half of 2012, according to Inmar, a promotion services company for manufacturers and retailers that publishes an annual coupon trend report. That follows a 35 percent increase between 2006 and 2011.

Matthew Tilley, director of marketing for the Inmar Promotion Network, said several factors are in play, from an improving unemployment rate to a growing interest in generic brands and discount stores. Brands are distributing fewer coupons and lowering the face value. They are also shrinking the redemption period, which now averages 2.1 months.

"Consumers are still very interested in a deal, but the brands haven't put as many offers out there and they aren't as attractive," Tilley said.

Coupon use surged during the recession as cash-strapped shoppers looked for ways to pinch pennies. People who had never used a coupon grabbed for the scissors. Once the domain of frugal moms, couponing became mainstream — even cool.

Next came reality TV. Extreme couponers wowed viewers with ways to get $250 worth of groceries for $3.79. Everyone wanted to get in the game.

Ashley Meyer, 25, has been couponing for six years and teaches classes on how to maximize savings. A former Tampa resident who now lives in Jacksonville, she buys several copies of the Sunday paper and checks online coupon sites a few times a day. She never pays full price.

Changes in coupons and store policies have curbed a lot of the deep discounting, she said. Shoppers can still get great savings; it just takes more time.

"For true couponers, it's made us rethink our game plan," she said. "We can't just go to Publix. We have to go to Target and Walmart. It's a little more work and you have to drive farther. But it's worth it when you can save your family hundreds of dollars."

Coupon clipping dates back to 1888, when Cola-Cola started distributing free drink tickets to promote its new product. In 1909, coupons achieved widespread use when C.W. Post offered penny coupons to market Grape Nuts cereal.

Today coupons are big business. About 311 billion were distributed last year, the bulk through newspaper inserts, but others through magazines, direct mail and print-at-home online sources.

While about 0.5 percent of newspaper insert coupons are redeemed at checkouts, the cost to a manufacturer can quickly multiply. A brand that circulates 50 million coupons valued at $1 each could face more than $250,000 in redemptions, not including the handling fee for the grocery stores and cost of designing and distributing the coupons. By comparison, printable online coupons have a higher redemption rate — about 7.7 percent in 2011.

As consumers' appetite for coupons has grown, more manufacturers have exceeded their coupon budgets, said Henri Lellouche, senior vice president of News America Marketing, which publishes the SmartSource weekly inserts. As a result, some brands have had to reduce their coupon distribution or rethink campaigns.

"Their budgets have really been strained," he said. "They end up having more redemption liability than they expected."

Manufacturers use coupons to promote sales of frequently purchased household items, such as frozen pizza, cereal and pet food. They add incentives for trying new products and reward customers for loyalty.

They can be sneaky, too. It's no coincidence that a new coupon for peanut butter comes out right before you're about to run out. Manufacturers space out promotions based on the average consumption time.

Coupons may be evolving, but they aren't going away. Coupon distributor Catalina Marketing sees shoppers gravitating toward online, mobile and load-to-loyalty card coupons. Particularly successful are "point-of-sale" coupons printed at the grocery checkout based on the shopper's latest purchase.

"Consumers are more powerful today than they have ever been in the marketplace," said Susan Gear, group vice president of strategic initiatives for Catalina, which is based in St. Petersburg and launched in late 2010. "They are wanting to be rewarded for their loyalty, and those rewards come in different forms. Coupons are one of those forms that are very popular."