As the cost of living continues to rise, new research from the Gift Card and Voucher Association (GCVA) reveals how shoppers are turning to gift cards to cut the cost of gift buying and help make ends meet. Over a quarter of UK adults (28%) are looking to reduce overall spending on presents in the immediate future. Nieces, nephews, aunts and uncles are most likely to lose out when their next birthday comes around.

In fact, 38% of gifts for extended family members are being downgraded or stopped entirely. There will also be less generous spending on work colleagues (48% reducing or stopping) and close friends (38%). Despite the financial squeeze, to still keep up with birthdays and gifting occasions, many people are switching from physical presents to gift cards. Of the 1,043 UK adults surveyed, 23% are planning to increase spending on gift cards to make present buying more affordable and avoid waste.

Commenting on the findings is Gail Cohen, director general of the GCVA. “Our panel of consumers are adopting several tactics to economise when it comes to gift buying. For example, people said that they intend to save fuel by travelling less to family gatherings.

“People are also trying to avoid price inflation on popular presents, using gift cards to set a strict budget for each occasion rather than have overall spending creep up. There was also increased concern about wasting money. People were less keen to take a chance on a surprise gift if there was a chance it would be unwanted, and the present goes unused.”

Bucking this trend, however, are gifts for teachers; 34% of people intend to increase their spending on end-of-term presents. This suggests how important a gifting occasion this has become. Also, the residual goodwill for teachers after lockdown.

Gift card sales were also predicted to increase for self-use (24%) since the cost of living crisis. They are often used as a way to cap spending and access rewards and discounts too. The research also found that rising costs are increasing the power of incentive schemes to promote loyalty and repeat custom. The use of gift cards by businesses, therefore, is likely to increase.

Cohen concludes; “We’re seeing enormous shifts in consumer behaviour as the impact of price inflation hits home. The gifting sector is not immune from its impacts and some reduced spending is likely. However, it’s clear that people are increasingly relying on gift cards as living costs rise. They offer an adaptable solution to a multitude of issues.

“Whilst accessing deals and discounts is a strong driving factor behind increased usage, we can see that gift cards are also enabling people to carry on gifting, rewarding, and saying thank you throughout this crisis.”