IMPENDING DEMISE OF PAPER COUPONS?

Representing a relatively new phenomenon in shopping, digital coupons show great promise for revolutionizing the industry. "In the literature, there is some information about these coupons, but there is no empirical data," notes Anita Bhappu, associate professor and division chair of retailing and consumer sciences at the University of Arizona, Tucson.

Digital coupons are utilized for advertising and promoting products, but consumers often find them drffkxit to use. Not to be confused with electronic coupons (available online) that have to be printed out before being redeemed, digital coupons are downloaded directly to store loyalty cards. A variety of retailers currently are testing them.

After loading tire coupons to their loyalty cards via an Internet connection, many could not recall what coupons were available. Aso, many reported that the coupons did not redeem at checkout and cashiers did not know how to correct this service failure. The promise, or at least the implied promise, behind digital is that "it is more convenient than paper and the way in which this convenience is delivered becomes a service," says Bhappu, also a research fellow in the Terry J. Lundgren Center for Retailing.

It is the service aspect that troubles shoppers the most Therefore, as services stand, toe format is not yet "up to par. While the promotional aspect of the coupon was just as important, the consumers were dissatisfied with the experience related to service," Bhappu explains.

About 3,000,000,000 paper coupons are issued in the U.S. annually but only one to two percent are redeemed. "Personally, I am not sure that coupons as we know them will continue in their paper format," Bhappu suggests. "The word 'coupon' no longer rnpies somethfog that you have to cut out".

However, she notes, the Mure of dgital couponing appears inked strongly to the future of cSgteJ payment and mobile cornrnerce Wireless phone carriers and credit card issuers are working with software companies to offer a "digital wallet" for consumers to store their credrt card information, along with digital coupons, on their smart phones Consumers would be able to pay for purchases simply by tapping their smart phones on a point-of-sale payment device, which also would recognize and redeem their stored digital coupons.

'The consumer just wants a seamless service and doesn't want to go through something extra, like downloading individual coupons. It has to be more convenient for them. We can learn from consumers today as they try what is available now to make tomorrow's technology better. Firms need to think about this because, if they do not do a good job integrating digital coupons into existing systems and training employees on the technology, they will experience service failure."

[Sidebar]

Digital couponing seems destined to replace the traditional cut-and-use version, which only are redeemed at a two percent rate.