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Coupon Use Plummets as Companies Tighten Belts

A woman sorts through coupons while shopping in California, Md.
Astrid Riechen | Washington Post | Getty Images
A woman sorts through coupons while shopping in California, Md.

After reaching fever pitch during the cash-strapped economic downturn, coupon usage appears to be waning, but not for lack of consumer interest, according to a new report.

Last year, coupon redemption fell 14.3 percent even with nearly the same number of deals, reported Inmar, a leading coupon processor. A separate report from competitor NCH Marketing paints a even bleaker picture, showing a 17-percent drop in coupon redemptions last year.

Still, NCH found that consumer interest remains high. Nearly four in five people surveyed said they regularly shopped with coupons for consumer packaged goods. So what gives?

"Whether due to actual budgetary pressures or frugality, marketers tightened their grip somewhat in 2012," Inmar's report said. "Whether or not these tactics diluted actual consumer incentive to redeem coupons may be debatable, but the overall decline in coupon redemption cannot."

During the year, distribution fell 1.2 percent, and overall coupon value dropped 2.8 percent. Average face value also declined.

While the average face value dipped by 1.9 percent, the consumer price index, which measures the cost of consumer goods, rose 2.1 percent—an inverse relationship that made coupons even less attractive to the consumer last year.

(Read More: Consumer Prices Gassed Up but Inflation in Check)

Stricter redemption policies added yet another obstacle to the ease of consumer clipping.

Compared to the year-earlier period, people had less time to redeem the discounts and on average were required to purchase more items in order to get the deal.

Joanie Demer, one half of the duo behind couponing megablog KrazyCouponLady.com, said she and her readers have noticed these trends.

Mirroring the decline in coupon usage, site traffic has also ebbed on Demer's blog. In mid-2011, it peaked at 7 million unique visitors per month following the hype surrounding TLC's "Extreme Couponing," a show that profiles coupon mavens as they purchase hundreds of dollars' worth of items with merely pocket change.

"We've kind of had two variables happening at once: the "Extreme Couponing" light kind of flickering out as well as the economy improving," Demer said. "Sometimes it's hard to differentiate between those two, but I feel like people maybe are not feeling that pinch they were in 2009, 2010."

(Read More: More Americans Debt-Free, but the Rest Owe More)

Demer herself appeared on the hit show's pilot episode but said she has mixed feelings about the program now.

"Coupon policies have been changing on average once a year since we started couponing back in 2008," she said. "There's no question that since the show, the frequencies at which stores are changing their policies is more often."

Many of the new policies are aimed in part at the avid couponers that the show has inspired, including limits for identical coupons for the same transaction that prevents people from clearing store shelves at rock-bottom prices. Still, none of these have been "game changers" for the industry, Demer said

"Once a shopper actually realizes that with minimum effort, you can save hundreds of dollars a month, there are endorphins, there is excitement, and there is a tendency to go overboard for six to eight weeks," she added.

Despite the drop in total U.S. coupon usage, Inmar sees sharp growth in Internet coupons ahead.

Coupons.com's Internet Coupon Index also shows a spike in digital coupon interest. The index measures how often people print mid-quality coupons the first time that they see them, and their subsequent redemption rates against the average rates.

(Read More: Why Consumers May Be on a Crash Course)

After crossing outside of its natural range in late 2007 just before the recession began, the index spiked again out of its natural range late last year.

The site's founder and CEO, Steven Boal, said the number of distributed food and beverage coupons (which constitute the bulk of the site's discounts) rose 35.93 percent from a year ago while the redemption rate also ticked higher.

Boal said Coupons.com's typical user is female, age 30 to 55, a homeowner with children, college educated and slightly more affluent than the Sunday newspaper user.

To capitalize on the shift toward digital coupons, the company bought Grocery IQ, a paperless grocery list app and website, in 2009.

"I think digital is very much tied to mobile," Boal said. "As people move their experience for grocery shopping to paperless, we're seeing those users shift from web-based coupon printing to a purely mobile digital-couponing experience."

He called the evolution of the shopping list "inevitable" as more household members share the responsibility of grocery shopping, a trend that increases the need for a shared list to avoid duplication.

"It's just much easier if I'm in my kitchen and I run out of Cheerios," he explained. "I say 'Cheerios,' and it adds it to my shopping list on my phone, and it will also then tell you if there are coupons for either a product like that or other products in the same category like milk."

-By CNBC's Katie Little; Follow her @katie_little_

Questions? Comments? Email us at consumernation@cnbc.com.

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