An Assessment of the Australian Retail Gift Card Market
For the second consecutive year, NAPCO Research, in conjunction with Blackhawk Network, has undertaken a comprehensive review of the state of Australian merchants’ gift card programs. 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 Australia-based retailers. Those retailers, which represented nine product verticals (apparel, department store, general merchandise, grocery, health/beauty, home furnishings, jewellery, specialty, sporting) were evaluated across 171 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:
- 59 percent of Australian consumers found gift cards an appropriate reward for brand loyalty, an optimal omnichannel gift card strategy should be a top priority for all retailers (Blackhawk Network Research); and
- 85 percent of Australian consumers are now using multiple digital touchpoints during their purchasing journey, indicating that retailers need to embrace these hybrid shoppers and connect with them where they are.
What the Data Revealed
Each component of the omnichannel assessment saw a slight decrease in year-over-year (YoY) score. However, it's important to note Australian retailers’ strong performance in 2022 compared with the UK and U.S., particularly with accelerated adoption for digital channels. This shows that it's even more crucial to optimise gift card offerings across the board and enhance customer experiences across all touchpoints for the year ahead, particularly given the global cost-of-living crisis and shifting consumer behaviours.
The total omnicommerce average score came in at 63 percent, which represented a 6 percent YoY decline. Here's a look at how the retailers performed on a channel-specific basis:
- E-Commerce/Digital: 58 percent average (down 10 percent YoY)
- In-Store: 51 percent average (down 7 percent YoY)
- Mobile: 80 percent average (down 1 percent YoY)
When looking at e-commerce/digital, the retailers received high scores for fulfilling the key criteria when it comes to the basics of searching for and interacting with gift card programs; informative and compelling gift card landing pages (89 percent); and a smooth checkout and post-purchase experience (74 percent digital gift cards; 68 percent physical gift cards).
As for areas of improvement within the e-commerce/digital arena, Australian merchants would be wise to enhance their marketing of gift card programs; drive business through sales promotions; and boost the flexibility of a gift card program by expanding payment options beyond the traditional, including offering physical and digital options.
As for in-store, the retailers scored well on fixture displays being easily locatable, neat and tidy, and well-stocked; the acceptance of and communication around mobile payment in-store, with 105 percent on average accepting NFC payments; and every merchant evaluated facilitated the redemption of digital gift cards in-store using a mobile device.
Conversely, areas of improvement in-store include the usage of eye-catching, communicative signage to drive foot traffic to gift card displays (the average score for this criteria dropped slightly YoY); ensuring own brand gift cards are more prominent in gift card fixtures and checkstands; and adding extras such as offering a gift-wrapping service to complement the gift card purchase experience.
Lastly, mobile was an area of real strength for the merchants evaluated, which earned an average score of 80 percent, easily the highest of the three channels assessed. In particular, the mobile-friendly recipient experience for digital gift cards was up 12 percentage points to 96 percent when compared with 2022, a significant step in the right direction. However, not everything was positive when it came to the mobile channel. When assessed on mobile wallet-friendly experience, the retailers' average score was just 23 percent.
In a follow-up article on the 2023 Merchant Gift Card Omnicommerce Evaluation, Australia Edition, 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.
