Gift cards have become one of the most popular gift options in recent years. Their use has surged dramatically as consumers and businesses have embraced them. Let's take a deeper look at gift cards and their rise in popularity.
History and Growth of Gift Cards
Gift cards first emerged in the 1990s as paper cards that could be redeemed for merchandise or services at specific retailers. They were gradually adopted by major retailers like department stores and grocery chains. However, it was the introduction of universal gift cards in the early 2000s that truly spurred their growth. These cards allowed spending at multiple retailer locations, providing more flexibility for givers and recipients.
Sales of gift cards grew steadily in the 2000s, reaching over $100 billion annually in the US by 2010 according to research firms. Their adoption was boosted by several factors:
Convenience for Givers and Recipients
Gift Card removed the uncertainty of gift giving as recipients could choose exactly what they wanted. They were also safer and more convenient than carrying cash as a gift. For busy people, gift cards were an easy last-minute gift option.
Marketing by Retailers
Retailers heavily promoted gift cards during the holidays as they drove additional purchases in stores. Shoppers who redeemed partial balances often spent more than the card value. This benefitted retailers.
Technological Advancements
The introduction of digital and mobile gift cards accelerated adoption. People could easily purchase and send cards online or via text/email without physical cards. Loading and reloading features made digital cards even more convenient.
Usage Patterns and Trends
Let's examine how consumers are using gift cards based on recent data:
Holiday Season Remains Prime Time
Over half of all gift cards are purchased during the November-January period centered around Christmas, Hanukkah, and New Year's. Holiday occasions continue driving most gift card sales.
Department and Retail Stores Dominate
While any retailer issues gift cards, department stores like Macy's along with big box retailers like Walmart & Target remain the top sellers. Combined they account for over 40% of total gift card sales.
Digital and Mobile Experience Growth
Nearly 30% of gift cards are now purchased as digital/mobile cards up from just 10% in 2015. Younger consumers especially are adopting digital/mobile cards at a rapid pace.
Multi-Card Buyers on the Rise
More consumers are purchasing multiple smaller denomination cards instead of one large card. This allows giving tailored gifts to several recipients from a single shopping trip.
Secondary Market Emerges Online
With the rise of gift card exchange/resale sites, a secondary market has developed where consumers sell unwanted cards at a discount. Some sites even let users liquidate partial balances for cash.
Impact on Consumer Spending and Retail Trends
Gift cards have fundamentally altered retailing and consumer spending patterns in meaningful ways:
Drivers of Additional Retail Spending
As mentioned, gift cards motivate extra spending at retailers. On average, recipients spend about 113-120% of the card's value when shopping in-stores according to industry studies.
Shifting Spending Online
Gift cards have boosted online commerce as well, with 20% or more card value now redeemed on retailers' websites. This benefits digital-first brands in particular.
Year-Round Impact
Their expanded usage beyond holidays means gift cards support retail sales every month rather than just in November-January seasons.
Influencing Purchase Decisions
Knowing they have a gift card encourages shoppers to visit stores and make planned purchases they may not otherwise. This steers spending to select retailers.
Leveling the Field for Small Businesses
Universal and digital cards help level the playing field, allowing even small, independent stores to compete for gifting dollars against large national chains.
The popularity and impact of gift cards shows no signs of slowing down. As technology improves their functionality further and merchants find new ways to promote them, look for gift cards to play an even bigger role in consumer spending and retail marketing in the coming years. Overall, they have reinvented the gifting experience for both givers and recipients.
Get more insights on Gift Card
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If you do, the destination gift card will be sent to the recipient’s mobile number within four hours.
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If you began using the MyBalanceNow portal, you can check your gift card equilibrium without going anywhere.
Once the page is fully loaded, search the box where you can enter your credentials for mybalancenow.
