Apple Helping To Revolutionize The Supermarket Coupon Industry

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Includes: AAPL, CPB, HRL, K, NWS, UL
by: Rick Shea

Apple's (NASDAQ:AAPL) disruptive and game changing technology is at it again, this time as a means to revolutionize the supermarket coupon industry. Most shoppers know what a hassle it is to collect and use coupons for grocery shopping. They don't do it because it is fun or easy but yet the savings on your grocery bill are too good to pass up. Consumers throughout the recession and in 2012 continue to use more coupons (despite the hassle) to cut their grocery bills. The growth of extreme couponing has even spurned a cottage industry. One thing all shoppers can agree on is collecting these paper coupons and keeping track of them while shopping is no fun.

Well new technology linking coupons from a digital website via an iPad app to a retailer's loyalty card lets users click instead of clip coupons and still save on their grocery bill. News America (NASDAQ:NWS), one of the leaders in free standing insert coupons (along with Valassis VCI), has debuted its new SmartSource Xpress program. Consumers can download a free iPad coupon app that allows them to click on all website coupons and then they will be automatically linked to their grocery retailer's loyalty card. No paper-no fuss and still the savings. The program is currently only available to consumers with iPads but the company expects to have an application that will work with iPhones later in the year. The test is currently in several leading retailers including Kroger (NYSE:K),Publix, Giant Eagle, Shop N Save, Marsh and other retailers and expects to add more retailers by the end of the year. Leading food companies have all also embraced the program including Campbell Soup (NYSE:CPB), Unilever, (NYSE:UL), Hormel (NYSE:HRL) and Schwan's Foods.

The new program threatens to cannibalize News America's and Valassis's main Sunday insert coupon business. Even today with the rise of internet coupons (coupons.com, coolsavings.com etc) coupons in the Sunday newspaper still account for 87% of all coupons distributed. News America correctly assumes that is better to lead the coupon revolution then to wait for smaller companies to come up and lead with the same technology. As a supermarket industry veteran with more than 20+ years as VP of Marketing for Kraft (KFT),Unilever and Entenmanns, I can honestly say their proactive move is the smart decision.

As I see it, the only thing holding this service back is the budgets of leading CPG companies. They are the ultimate customers and responsible for footing the bill for all the money saving coupons. Consumers will love it, retailers will embrace it but ultimately CPG companies will need to see incremental sales from this program vs. traditional FSI's (Sunday newspaper coupons) for it to be a strong success. Normally consumers are slow to embrace technology especially with the sometimes mundane chore like grocery shopping. In fact, a test like this linking paperless coupons to loyalty cards has been tried via Kroger. Several early adopters like Proctor and Gamble tested that program but pulled out after one year because it did not offer enough incremental sales for their marketing dollars.

What makes this one different? In a word Apple. The app on the iPad and the soon to come iPhone will make it cool to clip… sorry…. "click" coupons. Here's betting that one more area of our lives will be changed by the technology and coolness factor of Apple.

Disclosure: I am long AAPL.