Procrastinator’s Paradise: Gift Card Sales Are on the Rise

Posted by Eric Weinberg on

In 2014, MarketWatch reported that gift card sales were on track to reach an all-time high of $124 billiona 55% increase over 2007. The rise of the gift card is no mystery. For consumers, gift cards serve as a simple solution for the person who has everything. Increasingly they are also useful for those shoppers prone to procrastination, especially with the increased popularity of digital gift cards purchased and spent entirely online.

For merchants, gift cards are a valuable revenue source. First, they often go unredeemed. The same MarketWatch report estimated that close to $750 million in gift card value went unspent last year. Second, giftcards.com reports shoppers are likely to spend 20% more than the value of their gift cards. So, what are some of the most prevalent buying patterns for gift cards and how can companies leverage that information to make smarter marketing decisions?

To answer these questions, we analyzed gift card purchases from our Consumer Network and found clear indications of accelerating last-minute shopping trends, including high-volume shopping on the actual days of the event, as well as overall growth in gift card sales.

Our analysis included more than 60,000 gift card purchases made by 25,000 US consumers over an 18-month period spanning from January 2014 through June 2015.

What we discovered revealed some interesting trends:

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Many of the trends we saw in our data confirm what most retail professionals know intuitively: shoppers who opt for holiday gift cards do so as a last-minute purchase. That certainly explains the preponderance of buyers active on Christmas Eve as well as the late June rush to get something for dad.

How should retailers and others use this information to inform end-of-year marketing campaigns? We think that the data clearly indicates that gift card purchases will be up substantially this year compared to last year. Launching campaigns aimed at taking advantage of that trend—especially buying on Black Friday and Christmas Eve—would be smart. Also, January campaigns to get gift card recipients back to the sites or into stores can increase Q1 revenues because these (possibly new) shoppers are likely to spend more than the value of their cards.

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In the long term, retailers could start to think about bigger and more innovative ways to take advantage of the gift card trend. Are there packaging strategies that might add value by making what can be a generic gift seem more personal? Are there ways to think about gift card recipients as an opportunity to gain new, loyal buyers? There are many ways for retailers to think about how they can stay ahead of this trend and turn it to their advantage, all year long.

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About Eric Weinberg

Eric Weinberg joined Return Path in 2014. In his current role as President of Field Operations, he leads the company’s executional direction and strategic global alignment across all lines of business. Eric’s extensive experience in data and the digital ecosystem has been instrumental in exploring new opportunities to grow and diversify Return Path’s client base, including the development and launch of the company’s new Consumer Insight business.

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