P&G technology will let store scanners read coupons from your smartphone

Snipping coupons from the Sunday paper, stuffing them into a wad and producing them at checkout is a weekly ritual for millions of shoppers.
But that’s changing – and quicker than you can clip a dollar-off coupon for Tide.
Procter & Gamble, one of the nation’s biggest purveyors of coupons, has just agreed to work with a Silicon Valley start-up to pioneer a way to scan coupons on your smart phone.
It’s considered the Holy Grail of high-tech couponing: Redeeming money-saving offers on a smart phone simply by pointing the device at a standard-issue grocery store scanner. As unlikely as it seems in this wired and wireless world, a coupon’s barcode on a mobile phone cannot be read by most red-laser scanners, the kind used by retailers across the country.
“The inability for a red-laser scanner to read information displayed on a smart phone is not a small problem,” said Nick Holland, an analyst with Yankee Group, a Boston-based consultancy.
Solving that problem could speed the acceptance of mobile- phone coupons in the marketplace, possibly changing the way America shops. Manufacturers like P&G potentially could save millions in print ads. Retailers could target their most loyal customers. Shoppers could collect coupons electronically and speed through the checkout aisles.
To make that possible, P&G is throwing its considerable weight behind technology created by a San Francisco-based firm called Mobeam, and the two plan to test it sometime this year.
“This is pretty much our first step into it,” said P&G spokesman Dave McCracken.
Developers envision a simple process:
Consumers would download coupons from websites such as pgesaver.com directly to their phones. The coupon and barcode would appear on the phone’s screen and could be scanned at the checkout.
Stores would not need to install new hardware, and product companies like P&G could capture purchase information, allowing them to analyze how well promotions are working.
Many major retailers, including Kroger, Target, Walgreens and CVS, have their own systems that can scan coupons on smart phones – but only coupons issued by the store.
As a product manufacturer that supplies many retailers, P&G needs a system that can be used anywhere so shoppers can cash in on P&G coupons wherever they shop.
“Being able to use it with all retailers, that’s the critical thing,” McCracken said.
Couponing has become a way of life for shoppers, especially in the wake of the recession, when consumers are still closely watching what they spend.
In 2010, U.S. shoppers cashed in 3.3 billion coupons. That’s 27 percent more than redeemed in 2008, when the financial crisis plunged the country into a deep recession, reports the consulting and software firm Inmar Inc. Before that, coupon use actually had been declining in the go-go years of the late ’90s.
U.S. shoppers saved $3.7 billion with coupons in 2010, as product makers like P&G, General Mills and Kraft stepped up discounting to keep the value-conscious shopper coming back to their brands.
The number of consumers who say they regularly use coupons has increased from 64 percent in pre-recession 2007 to 78 percent in 2010, found coupon-tracker NCH Marketing Services.
The Sunday paper is still the king of the coupon – more than 87 percent of coupons distributed in 2010 were through newspaper inserts.
But that’s changing and so is the coupon consumer.
By 2016, shoppers worldwide are expected to redeem $43 billion in mobile coupons, predicts consulting firm Juniper Research. That would be an eightfold increase from $5.4 billion redeemed worldwide last year.
“Mobile coupons are going mainstream,” said the report’s author, David Snow.
Coupon queen and Enquirer blogger Andrea Deckard uses a program from Kroger on her smart phone that’s linked to her Kroger Plus card, the grocer’s loyalty program. Her phone displays Kroger’s weekly deals, and with a few clicks, she can download offers into her Kroger Plus card while she’s in the store.
When the cashier scans her card, the appropriate offers are recognized and redeemed.
“You can literally be in the store and realize you forgot a coupon and load the coupon right to your phone and get it instantly,” said Deckard, who runs the website savingslifestyle.com.
Coupons linked to a loyalty program like Kroger’s are working well now, says Van Baker, an analyst with Gartner. But you must be a member of the the retail loyalty program to use them, and the offers must be from that particular retailer, he points out. The retailer also gets to harvest a trove of information about shoppers – what they’ve bought, how often and where.
P&G and other manufacturers are banking on projections that 50 percent of the population will own a smart phone by 2015. Thirty percent currently own the phones, creating a demand for systems allowing them to easily cash in their coupons anywhere.
The current technology is not easy to use, Baker says. The shopper must present the phone to the cashier, who then must key in a number, as shoppers waiting in line grow impatient.
“The opportunity is growing, but it’s a long way from being a mainstream technology used by a large segment of the population,” he says.
That’s what P&G and Mobeam are hoping to fix.
“If couponing can be easier, faster and less costly for shoppers and retailers, we want to help bring it to life,” said Jeff Weedman, vice president of global business development at P&G.
In October, Mobeam closed a deal to receive $4.9 million in funding from several venture capital firms, including Yet2ventures, a company that was founded in part by P&G.
The two hope to get a pilot program started this year with a smart phone manufacturer to test the idea, McCracken said.