It’s the end of January. Do you know where your gift cards are? An important question for both retailers and consumers.
Surprisingly, only 38% of consumers will likely have used their holiday gift card after one month and by the end of the year, as many as 19% of gift cards may remain unused according to Paytronix. In fact, an estimated 3% of gift cards are never redeemed according to Mercator Group. Check your purse or wallet!
The most- desired Christmas gift for the 13th year in a row was – surprise – a gift card, preferred by 59% of consumers, according to the National Retail Federation (NRF) followed by clothing and accessories (52%), books/music/video (35%), electronics (29%), home decor (24%), jewelry (23%), personal care (21%), sporting goods (18%), and home improvement (17%).
Gift card sales grew in 2019
In its annual gift card sales report, Blackhawk Network found gift card sales doubled, growing 7% over 2018.
“The popularity of gift cards cannot be overstated; 80% of consumers reported receiving a digital or physical gift card for the 2019 holidays, making the cards a significant source of revenue for retailers. I expect that post-holiday gift card redemptions will drive an economic impact for retailers in early 2020,” said Theresa McKendree, vice president of marketing at Blackhawk Network.
“With more than half of consumers expecting 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 – gift cards are poised to make a huge boon for retailers in Q1. We are really excited about these results because strong gift card sales mean a strong start for 2020 retail sales,” she added
Napco Research estimates more than $171 billion was spent on gift cards in 2019. Digital gift cards also saw an increase of 4.5% over last year, accounting for nearly 20% of all gift cards sold according to Blackhawk Network.
2019 gift card data
Paytronix has a wealth of data for retailers in its 2019 gift card report.
In-store gift card sales totaled 50.3% of gift card sales in 2018, down slightly from 52.7% in 2017. Third-party sales of gift cards grew from 42.7% in 2018 to 45.2% in 2000. Corporate or bulk gift card sales were stable at 4.5% in 2017 and 4.6% in 2018.
In the restaurant sector, fine dining card sales decreased slightly by 1% while quick-service cards grew 18%, casual dining gift card sales increased 10%, and casual fast dining was up 4%.
Fine dining cards averaged $148.47 in value with casual dining at $45.35, fast-casual $23.72, and quick service $17.31.
E-gift cards on average saw a higher dollar value across the board compared with physical gift cards.
Holidays continued to be critical for gift card sales showing a 15% increase over 2017 compared to non-holiday sales growth of 6.3%. As data shows, holiday gift card sales start to spike rapidly from Black Friday and hitting a peak by December 20.
Why gift cards matter to retailers and online sellers
For retailers, the data shows the value of multiple gift card sales channels, the growing importance of digital gift cards, and the sales opportunity as consumers approach holiday shopping deadlines.
More than half (53%) of consumers expected to use their gift cards to take advantage of post-holiday sales. That provides substantial revenue and inventory management opportunities for retailers.
Nearly 60% of consumers expect to spend more than the value of their gift card and more than half (52%) said they would spend as much as $30 more according to Blackhawk Network research.
This all adds up to opportunity for retailers and online sellers. That 62% of gift card value unspent after 30 days could be worth more than $100 billion. That’s a huge revenue potential for smart marketers. Do you know where your potential buyers’ gift cards are?
Data charts and masthead visual courtesy of Paytronix
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