With most of our shopping continuing to take place online, year on year sales of gift cards soared by 117% during the second half of 2020.
Research by Gift Card & Voucher Association (GCVA) and KPMG UK showed that there was significant growth in the online channel for both B2B and B2C gift cards and vouchers.
What does this mean for physical retailers?
A whole new paradigm of sales and marketing has developed in recent years, emphasised heavily by the pandemic. Physical retailers are at a threat, and it is essential they implement strategic planning in their business plans to ensure success.
Earlier this year we discussed the subject of performance marketing as the future for brick-and-mortar retailers. It is clear that some kind of strategy needs to be implemented to ensure businesses increase their online presence in order to remain on top of the market and successful.
What were the findings of the study?
B2B gift card sales grew by 292% YOY, and B2C grew by 32%, communicating the resilience and growing significance of the B2B market.
Reflecting the switch to online shopping due to the pandemic, the research also found that sales across other channels declined in 2020. Both retailers and leisure operators took a hit, but leisure operators suffered the most, with B2B sales declining by 74%.
Store specific cards have significantly increased in popularity with more than half of the customers using the cards redeeming them within one month, and 98.6% within a year of receipt.
Gail Cohen, Director General at the Gift Card and Voucher Association, said: “There is no doubt that gift cards and vouchers have grown in stature over the last 12 months, with digital vouchers coming to the rescue of consumers looking to purchase that special something for loved ones in a challenging time.
‘’We have seen an impressive growth story in the gift card and voucher market over the last 4-5 years, and this industry presents a real opportunity for retail and leisure businesses, as well as the wider economy, to grow.
“The growth and resilience of B2B sales demonstrates that this industry has progressed significantly in recent years and is no longer the outdated consumer-only industry we think we all know.”
Commenting on the latest figures from a retail-perspective, Paul Martin, UK head of Retail at at KPMG, added: “Performance in the gift card and vouchers market very much mirrors the activity that we have seen on the high street over the last year, with sales of physical cards bought in store falling as digital gifting saw impressive growth.
‘’There has been a change in the status of gift cards which have re-purposed themselves, particularly with Generation Z consumers with their passion for technology and gaming. Digital innovation has been significantly fast-tracked allowing consumers to manage balances and is proving to be a useful tool in establishing a direct relationship between operators and their consumers.”
Gift card and vouchers will continue to provide consumers with a practical alternative to physical buying, with there being no sight of retail going back to normal in the near future. Looking at the positives, retailers have more of an opportunity than ever to connect to their consumers and adapt their offerings according to consumer needs.