An Assessment of the UK Retail Gift Card Market

For the third consecutive year, NAPCO Research, in conjunction with Blackhawk Network, has undertaken a comprehensive review of the state of UK merchants’ gift card programmes. The 2023 review included an assessment of retailers’ e-commerce/digital, mobile, and in-store gift card offerings, providing an omnicommerce view into the consumer gift card purchase and recipient experience. The full report can be downloaded here.

The report features data and analysis from the assessment of 50 UK-based retailers. Those retailers, which represented 10 product verticals (apparel/fashion, department store, general merchandise, grocery, home improvement, jewellery, restaurant - casual, restaurant - quick serve, specialty, sporting) were evaluated across 170 unique criteria. Key components evaluated included the online consumer purchase and recipient experience of both digital and physical cards (e.g., ease of discoverability, payment options, delivery options); in-store consumer purchase experience of physical cards (e.g., how well stocked were gift card checkstands and fixtures; how helpful was signage); and the mobile consumer purchase and recipient experience of digital and physical cards, as well as in-store mobile payment options and functionality.

The research was conducted from October 2022 to January 2023. Our analysts went through the research and buying experience, purchasing both physical and digital gift cards from each of the 50 retailers evaluated.

Why conduct this comprehensive research? Simply put, to gauge how well retailers are positioning their businesses to cash in on the revenue opportunity that gift cards present, even in the midst of a cost-of-living crisis. Consider the following data from the UK Gift Card & Voucher Association (GCVA):

• modest but encouraging year-over-year (YoY) sales growth of 1.1 percent in H1 of 2022; and
• a total H1 2022 sales figure of £1.25 billion.

What the Data Revealed

Each component of the omnichannel assessment saw a slight decrease in YoY score. This starts with the total omnicommerce average score of 62 percent, which represented a 4 percent YoY decline. Here's a look at how the retailers performed on a channel-specific basis:

• E-Commerce/Digital: 57 percent average (down 5 percent YoY)
• In-Store: 59 percent average (down 1 percent YoY)
• Mobile: 69 percent average (down 6 percent YoY)

When looking at e-commerce/digital, the retailers received high scores for selling both digital and physical cards online, facilitating all necessary purchases in one place (84 percent); aesthetically pleasing, easy-to-navigate landing page experiences; and offering a range of payment options which allowed for flexibility and straightforward, secure purchases.

As for areas of improvement within the e-commerce/digital arena, UK retailers would be wise to focus on adding gift cards as a product available for purchase within their mobile apps (just 31 percent of the retailers evaluated that have an app were doing this at the time of assessment); allowing customers to purchase a physical gift card as ‘click and collect'; and marketing your brand’s gift cards in all channels, including on your website, social media, and app.

Turning to in-store, the retailers scored well on eye-catching fixture signage, which enjoyed a jump of 20 percentage points to 68 percent when compared with 2022. As well as being more attractive, fixture signage was more informative too, increasing 35 percentage points to 71 percent on this criteria. In addition to signage, fixtures were better stocked in-store in 2023, with the average score climbing from 68 percent to 75 percent. Lastly, retailers received 65 percent of available points for neat and tidy till stands. However, this was down 4 percent YoY.

Conversely, areas of improvement in-store include better stocking of till stands (just 46 percent of retailer till stands were fully stocked, while 21 percent were significantly understocked or out of stock); cross-merchandising gift cards with relevant items (e.g., cards, wrapping paper); and ensuring there are many varieties of the retailer's own gift card at till stands and fixtures.

Lastly, looking at mobile, our assessment revealed that retailers are adapting to consumer behaviors and offering multiple mobile payment options for customers. Furthermore, they're optimizing their mobile websites, and apps to a lesser degree, for the gift card purchase experience, including making gift cards easily discoverable and then checkout process secure and convenient.

In a follow-up article on the 2023 UK Gift Cards Evaluated report, to come next week, we will share best practices for improving performance across the omnicommerce gift card purchase and recipient experience. In the meantime, you can download the full report here.