Going into the busy holiday shopping season, most retail business owners have all kinds of plans for promotions intended to make the most of this consumer smorgasbord. Although nearly everyone is out shopping for holiday gifts, businesses face tough competition for consumer dollars thanks to abundant sales and promotions aimed at undercutting competitors.
Gift cards are obviously great for consumers, who don’t want to worry about what to get recipients. They’re not as personal as actual products, but they’re more personal than straight cash, and they show that the gift giver has at least a modicum of knowledge about what the recipient likes.
For retailers, gift cards are not only easy sales, but they ensure customers will come in to redeem cards after the holidays, potentially increasing long-term patronage and sales as current customers recommit to your brand and new customers discover reasons to return. What makes holiday gift cards particularly beneficial to a retail strategy?
People Prefer Gift Cards
We all appreciate it when a loved one takes a hint and picks up that one special item we’ve been wanting for months, but simply couldn’t justify buying. Most of the time, however, we have to suffer through opening generic gifts we would never pick out for ourselves and pretending the gift giver has done a good job.
This is probably why so many people prefer to get (and give) gift cards. A well-known study by First Data, “Consumer Insights into the U.S. Gift Card Market: 2011” famously revealed that more than half of consumers would rather receive a $25 gift card than a gift valued at $45. It’s no surprise; with the gift card they can shop for exactly what they want. In addition, the study found that 83% of shoppers would rather give gift cards because of the convenience and time savings, with nearly 75% touting the ease of mailing gift cards to recipients in other locations.
Holiday Gift Card Sales are the Gift that Keeps Giving
During the last several years, sales of gift cards have been steadily increasing. Data from WalletHub shows that in just the last few years alone, sales have increased as follows:
- $118 billion in 2013
- $124 billion in 2014
- $130 billion in 2015
- $140 billion in 2016
- $149 billion in 2017
From 2007 to 2017, sales of gift cards at the holidays increased by an incredible 54%, and for the 2018 holiday season, WalletHub research predicts sales of around $160 billion. You definitely want a piece of this pie.
Perhaps even more important, however, is that consumers spend more when they enter stores to redeem their gift cards. A 2016 study from First Data found that 75% of gift card users spent more than the amount on the card by an average of nearly $28. This can make for a major boost to business after the holidays when a retail slump is common.
Even if the recipient forgets about his or her gift, you, as the retailer, still benefit because you have already made the sale. Further, with an assortment of customizable gift cards and gift certificates, branding is no problem, even for smaller businesses.
The bottom line is this: There are countless benefits to be gained from selling gift cards and it behooves you to encourage shoppers to spend on gift cards, as well as products and services.
If you are interested in purchasing Gift Cards, shop our website, Specialty Store Services, as well as for all your Retail Store needs. If you have a question that you would like answered immediately, you can Live Chat, or phone us at 800-999-0771.