Gone are the days when gift cards were perceived as an after-thought or last-minute Christmas present option.
Gift cards are now regarded more as an expressive ’gift of choice’ where retailer and messaging can match the recipient’s tastes and interests.
This shift in perception is among the findings of consumer focus group research we conducted.
It is also supported by data from the industry’s membership organisation, which reports steady growth of gift card sales in the B2C sector so far in 2016.
The UK Gift Card and Voucher Association (UKGCVA) reports an overall growth rate of nearly 4% for the sector, with e-gifting and online seen as areas for further growth.
The data shows a clear shift among its member retailers from paper voucher sales to gift cards.
Stand out from the festive crowd
The rise in popularity of gift cards has been paralleled by higher expectations among consumers concerning the product’s overall look and feel.
Attractive designs and packaging are key in a consumer’s choice process, our research found.
Boots and Selfridges both offer ribbon tied boxes, giving gift cards the look and feel of a present, and many retailers offer alternatives to traditional envelope wallets.
The focus group revealed that details such as foils and sparkle were appreciated and, in the case of some brands, expected.
Retailers need distinctive festive designs to ensure their brands stand out in busy displays.
The UKGCVA reports huge growth in sales from gift card mall displays – over 25% for the first period of 2016, representing a share of almost 10% of consumer sales.
Retailers should note occasion-appropriate designs were felt to be important for Christmas and other events. The UKGCVA identifies category specific gift cards as the retail sector’s most important product type.
Location, location, location
As direct store sales remain the traditional, most dominant distribution channel for consumer sales, making up 70.6% of the B2C gift card sector, in-store merchandising is crucial.
The outposting of gift cards on mall displays, as well as the traditional positioning near tills, was felt more likely to capture the impulse buyer as well as provide consumers with beneficial browsing time.
During this festive period, retailers should also position gift cards in Christmas gift displays, confirming their place as a valid present option.
What’s it worth?
Our research also confirmed that consumers are likely to spend more on a gift card than on a physical gift.
The sum spent depended on the closeness of the relationship with the recipient and the occasion, but averaged at around £26.
The future of e-gifting – what’s on the cards?
The UKGCVA identifies e-gifting as a significant growth area. Current sales from the sector make up 7.8% of the association’s membership sales, but this represents a massive 90.9% growth on 2015 for this sector.
However, the ability to personalise e-gift cards with festive messages will be vital if future growth is to be maximised.
Consumers express the need for a ‘thoughtful’ element to giving online where videos or photos could be sent with e-gifts, giving a personalised feel.
The UKGCVA also stresses the importance of retailers catering for all customers – tech-savvy digital buyers and traditional purchasers of gift cards and vouchers alike.
The fact that gift cards now represent an authentic gift choice, rather than a last-minute rush buy, means they should be considered a key part of a retailer’s seasonal offering.
Standing out in an increasingly large, but also competitive, market will be the key to success this year, and for Christmases to come.
- Nick Cahn is UK managing director at CPI Card Group