KANSAS CITY, Kan. – Associated Wholesale Grocers, Inc. (AWG) partnered with the University of Illinois Gies School of Business on a research project to discover the effectiveness of digital coupons on customer behavior. The students’ findings are helping to guide AWG Brands’ digital coupon strategy.
“Our partnership truly helps both parties involved,” said Kate Favrow AWG Brands Director of Marketing & Brand Development and Gies alum. “By allowing the students to work with real anonymized data, they are exposed to the complexities surrounding the grocery industry and gain real-world experience before entering the workforce. On the flip side, we gain new perspectives and appreciate the insights and recommendations that come from their analysis work.”
Starting in January 2022, three cohorts of students seeking master’s degrees in data analytics were provided five years of digital coupon redemption data from AWG and recent transaction data from seven consenting AWG retailers. The goal was to discover whether digital coupons and discounts are associated with a change in private brands purchasing behavior, in terms of more spending and/or customer retention.
This was the largest data set that any of the students had attempted to analyze. After months of data cleansing, goal setting, and analysis, the findings showed a variety of ways in which digital coupons affect consumers’ behavior and exposed areas that need more analytical focus.
For instance, the redemption and transaction analysis conclude:
- Consumers who use digital coupons also have bigger basket sizes.
- Digital coupons affect customer retention on AWG Brands. This means that consumers who used a coupon on an item, were likely to buy that item again even without a coupon.
- Redemption data showed that digital coupon usage peaked at the end of 2020 during the height of the COVID-19 pandemic; however, digital coupon usage is steady and grows at the end of each year during the holiday selling season.
“We sincerely appreciate AWG for their invaluable partnership, mentorship, and guidance, enabling our students to tackle real-world business challenges and develop vital problem-solving skills,” said Ashish Khandelwal, University of Illinois professor. “Their commitment to experiential learning is commendable, shaping the business leaders of tomorrow.”
Additional insights from the students will tie into the future analysis of the AWG Brands digital coupon strategy. In addition, the seven retailers who shared their transaction data also received personalized findings reports.
“Exploring real data, formulating questions, and employing the tools and techniques we learned in the classroom was truly enriching,” said student Mukul Kaushik. “We are grateful to AWG for providing us with this valuable opportunity.”
ABOUT ASSOCIATED WHOLESALE GROCERS, INC.
Associated Wholesale Grocers, Inc. (AWG) is the nation’s largest cooperative food wholesaler to independently owned supermarkets, serving 1,100 member companies and over 3,400 locations throughout 31 states from 9 wholesale Divisions. Consolidated sales for AWG are $12.3 billion. In addition to its cooperative wholesale operations, the company also operates subsidiary companies which provide certain real estate and supermarket development services, health and beauty care, general merchandise, pharmaceutical products, specialty foods, and natural and organic products. For more information, visit AWGinc.com.