Gift cards may not be new in the world of retail, but the ways shoppers and retailers are putting them to use is rapidly evolving, according to First Data’s 2017 Prepaid Consumer Insights Study. Customers and retailers alike are finding creative new ways to jump on the “branded currency” wagon. For shoppers, gift cards offer a secure transaction option that also offers new opportunities to collect discounts and rewards. For retailers, gift cards increase brand awareness and loyalty while incentivizing new shoppers and tracking crucial data on consumer spending habits.
Attract New Shoppers and Drive Sales
Gift card programs drive customers to stores and incentivize them to come back more often. In fact, 44 percent of respondents stated gift cards encouraged them to visit a store they would not normally have visited, with 53 percent stating gift cards encouraged them to visit a store more often. This is especially true among millennials, with more than half (55 percent) agreeing they're more likely to visit a store they would have normally skipped, and nearly two-thirds (64 percent) likely to visit a store more often.
Gift cards are also a way to help businesses drive incremental sales. Seventy-five percent of gift card users spent beyond the original value of their cards in 2017. While that number is equal to 2016, this year saw a $10 increase in the average overspend, from $28 to $38. With overspending on an upward trend, a strong gift card program is more than just an added convenience for your customers — it can also be an impactful sales driver.
The Era of the Self-Purchaser
Gift cards are no longer just for gift-givers. Shoppers are purchasing gift cards for themselves at an increasing rate. Sixty-two percent of consumers ages 18-34 self-purchased a gift card in 2017, and the majority of Gen Xers (60 percent) and baby boomers (54 percent) also took part in the trend. These shoppers cited discounts (37 percent), loyalty/awards programs (35 percent), and online shopping (27 percent) as their biggest incentives for self-purchasing gift cards.
New Ways to Use
As consumers are taking advantage of the benefits of gift card programs, retailers are also benefiting by using the cards to leverage their branded currency. Retailers are increasingly using gift cards to streamline store credits and rebates, a trend that’s sitting well with consumers. Eighty-one percent of respondents stated they were interested in receiving a gift card as store credit, with 71 percent reporting they're interested in receiving a rebate via gift card at the time of purchase.
And the cards aren't just for consumers; many retailers are using them to reward employees. In fact, 69 percent reported an interest in receiving employee rewards via gift cards.
Reaching the Millennial Shopper
Gift cards are especially popular among millennials, providing an ideal opportunity to connect with the most engaged and most versatile generation of shoppers. In 2017, millennials redeemed 2.5 times more gift cards than other age groups, were 9 percent more likely to reload a gift card, and 13 percent more likely to pay to personalize a gift card.
Gift cards are here to stay. That's good news for retailers and their loyal customers.
Dom Morea is the senior vice president of advance solutions and innovation at First Data, a global payment technology solutions company.
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He is responsible for leading the transformation and growth of the industry’s leading provider of branded stored value solutions. Morea is a veteran of the payments industry where he has focused on the creation and growth of enterprise-level, strategic relationships with many of the world’s largest retail, banking and technology brands.