Retailers Cash In on Gift Card Programs
Consumers, especially millennials, are continuing to embrace the value of gift cards at a record rate — and that’s good news for retailers. Considering that the average consumer spent $59 over the value of a gift card in 2018 — a $21 increase from 2017 — retailers have more motivation than ever to develop a successful gift card program that can boost sales, increase foot traffic and cultivate brand loyalty. 2018 marked the fifth consecutive year that consumer overspend on gift cards has increased, a positive indicator as retailers consider investing in a more effective gift card program in 2019.
Loyalty Programs and the Rise of Branded Currency
An interesting trend retailers should take note of is that gift cards are no longer just given for birthdays, holidays and special occasions. In fact, according to First Data’s 2018 Consumer Insights Study, 64 percent of shoppers bought a gift card for themselves in 2018, up from 58 percent in 2017. This trend is especially common among shoppers ages 18-23 and 24-37 (with 76 percent and 71 percent of shoppers in these age groups purchasing cards for themselves, respectively). Thus, these consumers are primed to become repeat customers for decades to come.
The reason for these massive shifts in self-purchasing? With more and more retailers offering loyalty and rewards programs through their reloadable gift card programs, consumers are using gift cards to cash in on rebates and discounts with the brands they most frequently shop.
This trend, along with the rise of digital gift cards, creates a golden opportunity for retailers to develop “branded currency” that incentivizes shoppers, builds brand awareness, and re-imagines the consumer experience. Creating a branded currency program through gift cards allows retailers to offer incentives, including customer rewards, merchandise credit, social media contest prizes, charity giveaways and more. Such loyalty programs help keep customers engaged and motivated to continue spending money on their gift cards. The strategy seems to be working for many retailers already, as 33 percent of consumers reloaded a gift card in 2018, including 61 percent among shoppers ages 18-23.
Digital Drives Sales
Consumers are also increasingly turning to the convenience of e-gift cards and mobile gift card options. In 2018, 50 percent of shoppers ages 24-37 stated they were interested in buying gift cards through a bank website or mobile app, and 52 percent of all consumers stated they would prefer to have a single app that manages all of their gift cards.
While adoption of mobile gift cards is still evolving, the future of gift cards is very bright for mobile. Embracing mobile gift card solutions will allow retailers to offer features such as auto-reload tools, real-time messaging, and other customer engagement features.
The future of digital gift card programs will also enable “flash stores” — i.e., campaign-based mobile tools that allow merchants to create and deliver exciting, short-term, time-sensitive sales incentives and special offers at any time to generate immediate sales. Merchants can customize flash stores to support their specific needs, such as moving overstock quickly, generating sales during off-peak hours, or targeting a specific type of customer.
The branded currency economy is growing, led by tech-savvy consumers who are always on the lookout for a convenient shopping experience and a great deal. In 2019 and beyond, the retailers out ahead of the competition will be those that embrace the new generation of commerce-enabling technology. Ready to cash in on gift card programs? Then take a look at First Data’s 2018 Consumer Insights Study to find out more.
Related story: Gift Cards Are Changing the Shopping Experience
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.