From book vouchers to electronic gift cards, every consumer has received some sort of prepaid stored value as a present. However, the UK Gift Card &Voucher Association (UKGCVA) wants these to become more than just an annual surprise. Patrick Brusnahan reports
Often regarded as a symbol of a time long gone, gift cards and vouchers are actually still popular.
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According to CardCash, the global gift card market is worth $127bn annually. Gift Card Granny predicts that this will reach $160bn by 2018.
A growing part of this space is e-gifting. CardCash expects this section to be worth $10bn by the end of 2016 and $14bn by the end of 2017.
While physical cards are growing at an annual rate of 6%, it was found that digital gift cards could be growing at an annual rate of 200%.
From one generation to the next
The UKGCVA found that there is a generational divide in the usage of digital gift cards, but not in the way one might expect. While 95% of millennials would consider purchasing a digital gift card or voucher, only 1 in 5 (21%) of millennials of have redeemed gift cards and vouchers online over the past year.
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By GlobalDataIn fact, nearly one in three (28%) consumers have never redeemed a gift card or voucher online.
On the other hand, over a quarter (28%) of baby boomers have redeemed a gift card or voucher online between 6-10 times over the past twelve months.
Gail Cohen, director general of the UKGCVA, told RBI: “Each generation has adapted to its particular environment and what’s been happening with gift cards.
“Pre-baby boomers took a trip on the bus to their local where you could buy your voucher and post it. Then the baby boomers moved to gift cards, but it was still in the store. Now, with the digital adventure and explosion, people are being given more online. Black Friday became Cyber Monday.
“One of the things we think, and the research told us, is that actually millennials are buying gift cards online. Baby boomers are being driven online by that generation, but they are also beginning to shop more online anyway.”
“Our research did tell us that the baby boomers are the ones buying and spending the vouchers online, while generation X and millennials are the ones gifting them. Millennials said they actually prefer to receive physical gift cards, but we wonder if that’s because they’re still at the age of wanting to receive a gift,” she added.
Innovation
As every nook and cranny of the financial sector looks to innovate and update its services, gift cards are one area in which innovation has not yet crept its head.
Cohen explained: “I think the physical gift card will be something that will always be there, but from an innovation perspective, you have online shopping malls, resale platforms, and personification.
“I do think we have to speed up. We’re going to explore innovation and certainly how the gift card industry can develop. We need to find the role we play in the financial market with the modern consumer. There are some new kids on the block innovating and the retailers recognise that they need to catch up. They’re all looking at digital solutions.”
With the new innovation coming into the market, how do you make consumers aware of it? Particularly regarding new technology, a common tactic is to push it towards millennials when the product could be useful for a larger chunk of the audience.
Cohen said: “The gift card market is getting very savvy towards marketing and segmentation of audience when, if you looked at gift cards in the past, you probably had a choice of two. They are realising that you need to be talking to specific audiences. I believe that the gift card market is looking at how you reach specific audiences, whether it’s male, female, millennial, baby boomer or anything. They’re looking at very sophisticated ways of reaching specific audiences.”
The most wonderful time of the year
Gift cards are, naturally, more popular when there is a reason to give a gift. The big event for them is Christmas with 40% of annual sales of gift cards and vouchers in the UK in that quarter.
“Our latest research did demonstrate that over two-thirds of UK consumers are most likely to buy a digital gift card around Christmas and we have no reason to believe that’s different with physical cards. Some call it the peak, but with 24/7 purchasing, the peak may change, but Christmas is still the peak of all peaks,” Cohen said.
Cohen concluded: “One of the things I would like to see is a ‘gift cards are not just for Christmas’ marketing push.”
