By Mo Chaar, Chief Commercial Officer, Givex
The holiday season is upon us, and with it comes a trend that has become a mainstay of the retail industry — a jolly surge in gift card sales. The gift card market, valued at an impressive $124 billion, witnesses 30% of its annual sales taking place between Black Friday and Christmas Eve, according to a recent report by Givex. This concentration in sales is not just a boon for the holiday season but also injects vitality into the typically slower months of January and February.
While the concept of gift cards is nothing new, the trends shaping their use in 2023 are noteworthy because they reflect broader shifts in consumer behavior and technological advancements. Here are some of the main takeaways to keep in mind for this holiday season and beyond.
The Impacts of Inflation
One of the biggest trends shaping gift card buying (and all types of buying) this year is inflation. As of October 2023, prices overall have increased by 3.2% compared to the same time last year and shoppers are keenly aware of these changes. As a result, three-quarters of Americans (76%) say that inflation has impacted their gift-giving plans this holiday season — a 10% increase from 2022, Givex reports.
Inflation often leads to tighter budgets, prompting consumers to seek value in every purchase. Gift cards become a practical solution, allowing recipients to choose exactly what they want or need, eliminating the risk of unwanted or impractical gifts. This trend might also lead to increased popularity in gift cards for essential services and goods, such as groceries or gasoline. Givex data found that nearly two-thirds (64%) of Americans would choose credit card gift cards over other types.
In response to inflation, retailers can adapt their offerings to better align with the needs of shoppers. For example, they may integrate gift cards more closely with loyalty programs, providing rewards that offset the impact of inflation. Retailers might need to adjust the denominations of gift cards offered to ensure they remain a viable gift option, as well. For instance, what used to be a $25 gift card might need to become a $30 or $35 card to maintain its purchasing power due to rising prices.
In general, gift cards can serve as a valuable tool for businesses to encourage upfront purchases and help with cash flow in an inflationary environment. Gift cards not only often result in a “lift” — shoppers spending more than they would have without the card — but they can also introduce new customers to the business who may not have otherwise visited.
Digital Over Physical
Another trend in 2023 is the growing preference for digital gift cards, signaling a shift toward a demand for online shopping experiences in general. One-third of Americans (32%) prefer to get a digital rather than a physical gift card. This proportion is higher among those aged 18-34 (39%) than those 55 and up (24%).
Data from recent shopping events like Black Friday and Cyber Monday further illustrates this shift. While Black Friday has seen a 13.8% value decline in U.S. gift card sales YOY, Givex reports, Cyber Monday’s figures have risen by 14.2% YOY in the U.S.
New Marketing Strategies
The marketing of gift cards has also evolved in 2023, with an emphasis on hyper-local strategies that embrace both the physical and digital realms. While in-store displays and staff training are crucial for physical card sales, for example, digital campaigns require an emphasis on user experience and personalization. This dual approach ensures that gift cards are not just an afterthought for customers but a prominent choice.
In regards to inflation, retailers might employ different promotional strategies to appeal to budget-conscious consumers. One emerging trend is the concept of added value for the gift card purchaser, for example. In the spirit of giving, retailers are experimenting with bonus cards, where purchasing a certain value of a gift card grants an additional amount for free. This makes the act of gifting a gift card more appealing and also encourages repeat business in the future.
Overall, the gift card market in 2023 is characterized by a blend of traditional and digital trends, driven by evolving consumer preferences and technological advancements. For retailers, the key to capitalizing on this trend lies in early planning, innovative marketing and a strategic approach that bridges the physical and digital divide. By understanding and adapting to these trends, retailers can turn gift cards into a powerful tool for driving sales and customer engagement, not just during the holiday season but throughout the year.
About the author
Since joining Givex in 2007, Mo Chaar has helped the company expand its North American footprint. He began his tenure as a Business Development Manager before becoming Vice President of Sales for North America, and then moved to his current role of Chief Commercial Officer. In this role, Chaar oversees commercial strategy and development worldwide as well as managing the sales teams within North America. His experience in gift card, loyalty and POS has played a pivotal role in the success of some of Givex’s largest partners. As Givex continues to expand on a global level, with a wide array of product offerings, there is a need to keep the teams aligned on pricing, product and sales approach. As the CCO, Chaar continues to manage the North American Sales and Corporate Account Management teams and also takes on the added duties of supporting the Global Managing Directors in ensuring that all functions of the organization are aligned to meet our strategic commercial objectives. Chaar received a Business Administration Diploma from Sheridan College and prior to joining Givex, served as a Location Manager for Jiffy Lube International.
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