As the retail sector begins to reopen following lockdown, retailers offering gift cards could see a boost in consumer spend. According to the latest forecasts from the Gift Card & Voucher Association (GCVA), shoppers receiving gift cards in lockdown will flock to spend them.
Due to the Covid-19 pandemic, consumers have increasingly been opting for alternative gifting solutions; ones that minimise contact, can be sent instantly, and enjoyed at a later date.
According to GCVA research, this has led to a spike in demand for the gift card industry, which is now worth £6.9 billion. This is particularly true for digital gift cards. They now represent 26% of all UK gift card spend, rising to 50% accounting for online spend.
Furthermore, recent GCVA research reveals that the worth of gift cards is felt well beyond the initial value of the card. Shoppers typically spend an additional £18.55 more than the average gift card value (£27.64) when spending their gift. This represents an uplift of 67%.
Subsequently, several consumer-facing businesses, including major retailers, hospitality brands and local businesses, expect to see an increase in spend over the coming weeks driven by increased gift card usage. Retailers that encourage customers to spend their gift cards are also likely to benefit from retained customer loyalty.
Almost a fifth (18.5%) of consumers become a regular customer of a business after receiving one of their gift cards.
This loyalty increases amongst a younger demographic. For instance, 31% of Generation Z/Millennial (16-34-year-old) shoppers have become a repeat customer after receiving a gift card.
Finally, gift card self-use, when consumers purchase them to spend on themselves, is likely to see a similar boost. Self-use now represents 21.8% of consumer spend on gift cards, a value of just over £1 billion.
Gift cards bought to support local businesses are likely to boost this figure even further in the coming weeks.
Commenting is Gail Cohen, director general of the GCVA. “Our members across the industry have responded fabulously to the challenges created by Covid-19. Not only through enabling new ways of gifting, but also ensuring those in isolation could purchase essential goods, schools could feed their pupils, and key workers received the recognition they deserve.
“Because of the industry’s swift action, gift cards have emerged as the nation’s payment solution of choice during this pandemic; offering a safe, socially distanced way to both show loved ones how much you care and support local businesses at a time when they need it the most.
“As we begin to emerge from a challenging period, we would urge anybody that has purchased a gift card either during lockdown or beforehand to get out there and enjoy them. After all, given gift cards’ proven worth in creating and retaining customer loyalty and additional spend, you’re not only treating yourself but also supporting your favourite businesses. What’s not to love?”
For more information on the GCVA, please click here.
