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A hell of a lot of labor for a low-value piece of paper." That's how Bob Grottke, a Chicago-based coupon consultant now working for Catalina Marketing, describes the state of coupon processing in the grocery industry. "When you think about taking 7 billion odd-shaped pieces of paper and pulling them out of all these retail stores, then giving them to 15 clearinghouses, which send them across the border to Mexico, where they're sorted out and counted, and then packaged and sent back--let's face it, that's cumbersome," says Grottke.
But the grocery industry is no longer content to process coupons in this circuitous manner anymore. For the past few years, some progressive companies have been implementing a Quick Pay system that provides much faster reimbursement of redemption funds to grocers (see sidebar). And this year, a movement is afoot to develop and test electronic coupon clearing, which will reduce if not eliminate the need for all the costly cross-border paper shuffling. "The industry is looking for a way to fine-tune the coupon process," says David Sefcik, manager of corporate scanning, Giant Food, Landover, Md., and co-chairman of the GMA/FMI joint industry coupon scanning subcommittee.
With electronic clearing, the focus will be on the checkout where coupons will be presented, scanned, validated and cleared. Instead of physically handling, sorting and counting coupons, computer records of coupon exchanges will be electronically transmitted to manufacturers or third parties, followed by the electronic transmission of reimbursement funds back to retailers. As in Quick Pay, the reimbursement will come much faster than under the paper system.
In theory, by streamlining the coupon redemption process, electronic clearing reduces the cost to all parties and decreases the number of charge-backs and deductions resulting from manufacturer-grocer disagreements. It even fits in with the efficient consumer response (ECR) initiative's call for replacing paper with electronic communications. "Ultimately, we want all coupons processed this way," says Sefcik.
But it is not clear how quickly the grocery industry will abandon a manual system that has been in place for decades for an electronic one that has only begun to be tested. "We have a lot to learn," admits Sefcik. While some stores will test electronic clearing this year, observers don't see widespread use of the process...