Consumer Catwalk: Cheap Is The New Black

Recent research conducted by Valassis has uncovered some not-so-surprising findings from their 2011 RedPlum Purse String Study. In particular, consumer sentiment is still wallowing the doldrums. In fact, 82% of consumers surveyed have the same or less confidence in their financial outlook compared with last year. This is mostly driven by ongoing reports of long-term high unemployment, rising food and gasoline prices and political gridlock in Washington.

As the economy continues to sputter, money-saving behaviors such as couponing is becoming an ingrained habit with many consumers. Coupon usage has steadily increased for the past five consecutive years, creating a generation of “forever frugals” who plan to continue with their spendthrift ways even when (or if) the economy improves. Bottom line: Scrimping is here to stay.

Does this spell bottom-line bad news for merchants participating in social coupon offers? Perhaps, if one simply looks at the topline discount being offered. But aside from the usual half-off discount being dictated by most social coupon sites, merchants still control 70% of variables in any social coupon offer, including duration, limitations on quantity, purchase requirements and time restrictions.

The entire model of social couponing is built upon the hope of repeat business. Great products and services will always be a primary driver of that end goal. Very few social coupon customers will return after a bad experience, even if their repeat visit is cajoled with another 50% off.