It’s no secret to retailers that gift cards are important. They’re another stream of revenue for your business, which also means they’re an additional source of profit – and they’re a great way to help ease both cash flow and stockholding capacity.
Christmas is an especially strong period for gift card sales, so you need to maximise potential in this area and capitalise on these sales. With the retail market beginning to recover after Covid-19, and all the lockdowns that we have been subjected to, the gift card industry is coming out of the other side seemingly unaffected.
In fact, during shop closures brought on by the pandemic, consumers turned to gift cards as a way to support their favourite retailers during such a tough financial time. The growth of the market in the first half of 2021 is proof that this is a continuing trend.
The UK gift card market is one of the most mature in Europe, with the Gift Card & Voucher Association valuing it at an estimated £7bn. This is only continuing to grow, with the first half of 2021 alone producing gift card sales worth £1.259bn. This figure is expected to rise in the second half of the year, with the addition of Christmas sales.
Why Get Gift Cards For Your Business?
The last 12 months saw a growth of 19.5% for gift cards sold directly to the consumer, when compared with the previous like-for-like period. The forementioned previous period also covers the market prior to the pandemic, so this growth is even more significant.
Gift cards that are specific to just one retailer or a chain of retailers have grown in popularity, now holding a 60.4% share of the market, but this is likely to change. According to the GCVA’s State of the Nation 2021 report, 62.6% of respondents expect the gift cards they purchase to be flexible when it comes to redemption. This suggests that a regional community loyalty model is becoming a popular ideation amongst consumers and retailers alike.
There is also an uptake in the trend of digital gift cards. 42.7% of people are more likely to buy their gift cards online rather than in-store, and digital gift cards penetrated the market at a rate of 45% in 2020.
Flexibility is key when it comes to gift cards, but the benefits that retailers can see from their gift card sales are significant. 72% of all gift card users spend 20% more than the original value of their card, which works out at an additional £16 for every £100 redeemed.
Gift cards also introduce your business to people who may not otherwise become a customer. 42.6% of people have made a one-off purchase with a new business after receiving a gift card for that shop, and a further 21.7% of people said they went on to become a regular customer.
The way you present your gift cards in-store can also make a considerable difference to the number of sales you see. 44.6% of people who responded to the GCVA’s market research said that, within the last three years, their gift card purchases have been influenced by the way they’re displayed in-store.
Presenting your gift cards with bespoke matching carriers can add a professional touch to your business, and displaying them in a prominent position is essential – consider displaying them close to your till, to take advantage of customer impulse purchases.
Gift cards, especially during busy periods such as Christmas, can make a substantial difference to your retail business’s revenue. Find out about gift card systems, or get in touch with a member of our expert team.
