Heard enough about digital coupons and the companies behind them? The candidates are starting to look and sound the same. It's time to dig a little deeper. I'm not sure if the average shopper or investor is aware of the difference amongst Coupons.com (COUP), RetailMeNot (NASDAQ: SALE), Cartwheel, etc., but I believe the winning combo behind the name is Walgreens (WAG) and Mir Aamir. These two make Coupons.com the long-term winner.
Aamir's Previous Success With Just-For-U
Before Mir Aamir was the Chief Financial Officer and Chief Operating Officer for Coupons.com, he was the President of Customer Loyalty and Digital Technologies for Safeway, Inc. (NYSE:SWY). Don't overlook that one of Aamir's business alma maters is A.T. Kearney. This consulting firm continues to be a forerunner in communication media and retail.
Dating back to Q2 2012, Aamir was leading the launch for an electronic coupon system that connected smartphones to the Safeway Club Card. An all digital experience, this was a coupon that gave shoppers the next best thing after savings: speed. With this app, a shopper didn't have to scan +20 coupons at the register or keep them in a resurrected fanny bag; it was just one card swipe for instant savings. A quick glimpse of this timeline shows that Safeway went from trading lows of $13.18/share to highs of $35.82/share.
Competition vs. Synergy
It appears as though Target (NYSE:TGT) has chosen to compete in the arena of digital coupons and why not? After all, aren't they famous or is that infamous, for their digital scanning? Their new Cartwheel is an attempt to keep the coupon income in-house, rather than partner with a tried and true outfit. Wal-Mart (NYSE:WMT) is also looking to expand its savings system to incorporate digital coupons. So, is everyone going to just walk-on by this ready-to-go product, Coupons.com's Retailer iQ, and try from scratch? No. Walgreens sees the value in synergy and other retailers should take note.
This opinion doesn't go without a counter. Mainly it is Coupon.com's valuation that is in dispute, rather than the technology and business model. Goldman Sachs last gave it a rating of sell with a $19.00/share price target. They also spoke favorably about the long term, "COUP to grow revenues faster than the overall sector" and the ability of Retailer iQ. Since the IPO in March 2014, the share range has been between $15.56-$33.00.
Walgreens Creates Small Store Envy
Walgreens is the largest drug retailing chain in the United States. There is a 50-75 store growth projection for 2014. The most northern store is currently under construction in Fairbanks, Alaska. It does not own a supercenter, or have early morning pep-talks and team cheers. If you are looking to buy ibuprofen and a riding lawn mower, they are not your one stop shop. In 2010, Walgreens was capitalizing on its ability to fit into congested city planning and collect customized loyalty card data per store location. A check of this timeline shows that Walgreens went from trading lows of $26.26/share to highs of $76.39/share. Wal-mart is following its coattails with their smaller Express stores and Target has created their half-sized outlets as well.
If it's good for Walgreens it's good. The supercenter stores have moved into city zoning, but they are ignoring the next big thing. The coupon system of Coupons.com, with Mir Aamir, will be showcased with Walgreens' application. Seeing the track history for both contributors, this could be another catalyst to success.
Disclosure: The author is long COUP. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.