Aug 27, 2009
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Retailers plan Web coupon strategy for holiday

Aug 27, 2009

By Nicole Maestri - Analysis

SAN FRANCISCO (Reuters) - Shoes.com prefers to woo shoppers with the latest Steve Madden gladiator sandals or sheepskin Ugg boots, rather than the newest coupon offering discounts to shop on its site.

But the online retailer also knows bargain-hungry shoppers are scouring the Web for discounts, and its rivals are more than happy to provide them. So it is putting coupon codes on Savings.com that customers can use to save money on its site.

"We're not about, 'Oh, here's great deals, here's discounts'," said Kevin Smith, Shoes.com's affiliate marketing and business development manager.

But with more consumers trying to stretch their budgets, "we know that in order to be competitive in the space, we have to do something that appeals to them," he said.

During the economic downturn, consumers have taken their hunt for deals online, scouring sites like Savings.com and RetailMeNot.com for printable coupons or online discount codes. The trend is not lost on retailers, who are trying to spark sales amid the longest recession since the Great Depression.

But with retailers already thinking ahead to Christmas season and visions of last year's dismal holiday season still dancing in their heads, they are looking for ways to use online promotions to win sales during the most competitive time of the year.

"There is a large niche and a growing niche of consumers that are deal-sensitive," said Loren Bendele, CEO of Savings.com. "They're not going to buy unless they can find a great deal and if one merchant doesn't have a great deal, they're going to go somewhere else."


Traffic to sites offering online shopping coupon codes rose 36 percent in June from a year ago, according to Hitwise, while traffic to sites offering grocery and printable coupons jumped 49 percent.

Meanwhile, 57 percent of shoppers said they are using coupons more often to cut expenses, according to a survey conducted earlier this year by comScore, while 31 percent said they are getting those coupons from online services.

The sites often act as aggregators, posting coupons and discount codes found by scouring the Web. But retailers are also working with the sites to develop exclusive deals.

One such retailer is Petco. Stacey Georgoulis, Petco's affiliate and partnership marketing manager, said Web-savvy shoppers are now searching for terms like "Petco coupons" and "Petco promotions" before buying pet supplies.

As a result, coupon sites have become a key part of the retailer's online strategy, and it is now offering a special coupon on Savings.com giving shoppers a 10 percent discount.

"It's definitely a driver for people to make a purchase," she said, adding that deals, especially free shipping, keep shoppers from abandoning virtual shopping carts at checkout.

Perusing the offers on sites like Savings.com also allows Petco to react quickly to deals that rivals may be touting.

"We monitor that closely to make sure we are always the more attractive choice," she said.


Guy King, co-founder of RetailMeNot.com, said online coupons, like one where Target Corp (TGT.N) offered $5 off a purchase of $50, are taking on a life of their own as the deals get re-posted on blogs, Facebook and Twitter.

RetailMeNot.com is now seeing a jump in retailers looking to put ads on its site for the holiday season, he said.

Retailers are also working with Savings.com to craft unique offers that will win shoppers this holiday, said Bendele.

For instance, he said that with flowers, offering a high percentage off works well, while for big-ticket purchases like consumer electronics, retailers get a better response by offering a dollar amount off a minimum purchase.

"Those types of deals are good for retailers because they encourage consumers to spend more," Bendele said. "If (retailers) find their average ticket price is $1,100, they make a coupon that says $150 off any purchase over $1,500 ... because it drives the consumer to spend more money."

If back-to-school bargain hunting is an indication, shoppers will be scouring the Web for deals come Christmas, said Aliza Freud, CEO of marketing firm SheSpeaks.

According to a poll of 233 women conducted by SheSpeaks, 46 percent said they were using more online coupons or promotional codes to complete their back-to-school shopping this year.

"Retailers are already very concerned about the holiday season," Bendele said. "They're already thinking about their deal strategy."

If they don't, "consumers will find deals from their competitors, and they'll loose those sales," he said.

(Reporting by Nicole Maestri, editing by Matthew Lewis)

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