How Strong 2019 Holiday Gift Card Sales Will Kick-Start the Economy in 2020

With the holiday 2019 season in the rearview, now’s the time for retailers and marketers to reflect upon key trends that emerged during a wildly successful shopping season — and leverage those takeaways to kick off a profitable 2020.

Despite debate early on about the impact of political issues (e.g., Chinese tariffs) and the fewer shopping days between Black Friday and Christmas, the 2019 holiday season saw impactful growth, with overall U.S. retail sales rising 5.1 percent last holiday season. And a significant portion of that growth can be attributed to branded payments in the form of gift cards.

Retailers and marketers wanting to start 2020 with a bang should consider these hot gift card trends.

Gift Cards in High Demand

Outpacing holiday retail sales estimates by 50 percent, consumers spent 7 percent more on gift cards during the 2019 holiday season than in 2018, according to Blackhawk Network’s post-holiday spending report. Gift cards played a major role in holiday retail success, with 80 percent of consumers surveyed reporting receiving a digital or physical gift card during the 2019 holidays, making gift cards a significant source of revenue for retailers.

Gift cards will have a strong impact on retail sales in Q1 since more than half of consumers surveyed expect to spend as much as $30 more than the value of their gift cards — and many planning to spend them within weeks of receiving them. The strong start to 2020 for retailers, boosted by gift card redemption, can play a key role for retailers to achieve growth goals this year.

Digital Gifting on the Rise

While physical gift cards continue to remain the most popular option among consumers, more streamlined and user-friendly digital and mobile gift card options continue to expand the adoption and application of e-gifts. According to Blackhawk’s report, e-commerce sales during the holiday season were up more than 12 percent, and digital gift cards accounted for nearly 20 percent of holiday gift card sales in 2019. Blackhawk’s research also found 23 percent of surveyed respondents reported receiving digital gift cards.

While Gen Z (41 percent) and millennials (39 percent) are most likely to use digital gift cards, digitally enlightened consumers of all generations are increasingly using them, for both gifts as well as self-use. With the rise of digital gifting continuing to have a major impact on retail growth, brands can greatly benefit from a seamless, secure and easy gift card purchasing experience from their website, social media channels, mobile apps, and brick-and-mortar stores.

Retailers Can Make Gifting Easier

Holiday shopping can generate anxiety for many consumers. Even after putting a lot of thought into gifts, they often worry about getting “the right” gift. Last year, many consumers aimed to take the guesswork and hassle out of holiday shopping by making gift cards their go-to choice. Many shoppers surveyed in Blackhawk’s earlier pre-holiday study saw gift cards as the solution to their primary pain points, including dealing with crowds (33 percent), not knowing what to buy or buying the wrong gift (17 percent), and waiting in lines (13 percent). For retailers, this means that making gift cards easily visible and accessible, both online and offline, should be a key focus.

According to Blackhawk’s research, 33 percent of surveyed consumers received a gift they weren't satisfied with this holiday season. The National Retail Federation (NRF) reports that 55 percent of consumers will return any unwanted gifts or holiday items within the first month of receiving them. Gift cards can help to alleviate some of the frustrations retailers are bracing for with post-holiday returns, while also facilitating better brand interactions because they enable recipients to buy whatever they want.

Keeping the above gift card trends in mind, smart retailers and marketers can tailor their 2020 strategies to cater to consumers’ latest shopping tendencies and preferences. The payoff? A strong start to Q1 and momentum for success throughout 2020.

Theresa McEndree is vice president of marketing at Blackhawk Network, a global industry leader in gift card sales and branded payments, delivering branded payment programs to help meet today’s most challenging business objectives.