Gift Cards Go Above and Beyond

online holiday gift cardsAccording to the National Retail Federation, for the eleventh year in a row, gift cards remain the most popular items on wish lists, requested by 61 percent of those surveyed, followed by clothing and accessories at 55 percent, the highest level the category has seen in 12 years.

So, promoting gift cards to consumers seems like a no-brainer during the holiday season. But a new study shows that the benefits of gift cards for retailers may extend far beyond Q4.

According to a First Data study, The Evolution of Branded Currency: 2017 Prepaid Consumer Insights Study,  there are many upsides of gift cards including:

  • 97% have redeemed their gift cards.
  • 44% of consumers said a gift card prompts  them to visit a store they would not otherwise have visited.
  • 53% said they are likely to visit a store more often because they received a gift card.
  • 75% of respondents reported overspending when using their gift card.
  • Those that overspent did so at an average of $38 above the value of the card. This was $10 more than the average overspend by consumers in 2016.

Additionally,  many consumers are purchasing gift cards for themselves. “Self-gifting” continues to be a big trend among gift card users. Sixty-two percent of millennials reported self-purchasing gift cards. And 37% of consumers across age groups pointing to loyalty/rewards programs (35%), and online shopping (27%), as their biggest motivations, according to the First Data report.

Gift Card Growth

CEB TowerGroup report says digital gift cards, which registered a 26% rise in 2016, will continue to grow. CEB projects that total gift card volume will reach $160 billion by 2018. Digital gift cards, which represented $7.1 billion in volume 2016, will account for $18 billion by 2018, more than 11% of all gift card spend.

On average, consumers purchased 6.5 physical gift cards for 2017, up from the 5.9 average purchased in 2016. Digital gift cards were just slight behind, with consumers purchasing an average of 6.1 digital cards over the year. However, that is a large jump from the average of 4 purchased in 2016, according to CEB.

Mobile gift card apps may be helping to drive this digital gift card use, with 52% of consumers saying they have used an app, and 65% of Millennials saying the same, the CEB study says.

Often online retailers wait to promote gift cards until the end of the holiday season when they can no longer guarantee delivery of physical goods. The benefits outlined above show that online retailers should rethink old strategies and do a big push for gift card throughout the holiday shopping season.