E-Retailers Move Towards Digital Couponing

To those who enter the grocery store every week with a fistful of paper coupons, your days are numbered. Marketers do still publish coupons in newspaper circulars nationwide, but they are being replaced over time with their digital equivalents.

Younger consumers in the millennial generation demand simpler, and more tech-centered (and mobile) solutions for their cents-off shopping. As a case in point, McDonalds’ popular rewards program, which earned you a free McCafe drink after you saved up a certain number of stickers peeled off of your cups, was replaced with a mobile app, which allows you to simply show the QR code on your mobile to the clerk at the counter, who scans it and your reward points are automatically logged.

Starbucks attempted but failed in offering similar rewards with its Starbucks K-Cups Packs sold in grocery stores. With a desire to create their own Starbucks Rewards loyalty program, they actually made it more difficult for shoppers to earn rewards — requiring them to scan their grocery receipt, and either manually upload it or mail it in.

Consumers always love rewards, whether digital or otherwise, but when consumers have to work too hard to get it, the value of that reward is diminished and it becomes less emotionally satisfying, and therefore becomes a failed marketing tactic quickly.

The next wave of couponing will combine mobile offerings with new grocery innovations like smart shelves, now in use at selected Kroger’s grocery stores, which may recognize a customer with a mobile app active as they pass by, and issue a coupon based on their preferences. No doubt Amazon will do the same as they bring their own brand of technology, automation and customer convenience to their newly acquired Whole Foods grocery chain.

We would expect some of the innovations Amazon experimented with in its limited rollout of Amazon Go stores to move to Whole Foods. Amazon Go, Amazon’s first foray into brick-and-mortar grocery stores, is a fully automated store, where customers walk in, switch on their mobile app, and the store comes to life — recognizing the customer and his or her preferences, tallying up purchases as they are taken off the shelf and placed in the cart, and finally, allowing the customer to bypass the traditional checkout counter and simply walk out of the store, with the customer’s Amazon account automatically billed. The friendly granola-powered hippies at Whole Foods will ultimately be replaced by friendly apps, powered by big data and analytics.

Don’t expect any paper coupons from anything related to Amazon — this giant represents the next generation of retail, and coupons will be issued digitally, placed on mobile devices for convenient and immediate use, and custom-tailored to each individual’s preferences.