Despite challenging trading conditions, gift card and voucher sales in the UK continues to grow with the market increasing by 7.2% year-on-year according to the latest analysis carried out by the UK Gift Card & Voucher Association (UKCGVA) and KPMG UK.

The report – looking at sales performance in the first half of 2019 compared to the same period the year before – recorded a healthy 15.6% growth in business-to-business (B2B) sales, which includes gift cards issued via an employer’s reward programme.

While sales direct to consumers decreased by 9% – likely due to low retail sales growth in recent months – they remain the main driver of business-to-consumer (B2C) gift card sales, accounting for two-thirds of the market.

Retail sector the most important

The analysis also found that retail remains the most important sector within the gift card industry, with retail sales making up 67% of the overall market. There was also a strong improvement in the leisure industry, with the sector has grown by 13% year-on-year.

Although a preference for physical gift cards continues – taking 72.5% of the market share – digital and e-vouchers are proving increasingly popular, now accounting for 26.9% of sales (up from 12% in the first half of 2018).

Promisingly, gift card malls (the selection of gift cards stocked by third-party businesses) grew by 3.6% on a like-for-like basis, highlighting the growing importance consumers place on convenience and choice in the gift card market.

“The continued growth of the market only underlines gift cards’ increasing importance as a revenue and loyalty generation tool. It’s particularly encouraging to record this growth in the first half of the year, which tends to be slower compared with the months leading up to Christmas,” said Gail Cohen, director general for the UK Gift Card & Voucher Association.

“The growth of gift card malls is also noteworthy, pointing not only to the consumer’s calls for added convenience and choice but also how consumer businesses are forming alliances and partnerships to generate additional revenue and loyalty.”