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October 23, 2024
Will Gift Cards Dominate the 2024 Holiday Season?
The 2024 holiday shopping season is almost in full swing, and many consumers plan to skip the traditional gift this year, opting to give away gift cards instead. As tighter budgets, increased credit card payments, and higher prices apply pressure to shopping habits, many consumers see gift cards as a more affordable, convenient option to spread the holiday cheer.
A new survey, conducted by payment solutions firm Blackhawk Network, found that the average shopper plans to spend roughly 48% of their holiday budget to buy gift cards this year versus only 39% in 2023. Breaking it down by age group, the percentage was higher among Gen Z and millennials, who intend to use 54% of their gift spend on cards, up from 41% last year.
“Our research found that a growing number of people will be leaning on gift cards, actively looking for rewards and leveraging the points and stored value they’ve accumulated in loyalty and reward programs to fuel their holiday shopping,” Blackhawk’s Chief Marketing Officer Jay Jaffin stated in a press release.
The Value of Gift Cards
With near-constant economic challenges in recent years and many Americans still stressed about their current financial situations, gift cards have become “more valuable” than the usual gift. According to a survey by financial technology company Fiserv, many consumers are using gift cards as extra money to pay for everyday expenses like groceries. The company reported that 49% of respondents agreed that gift cards were more valuable to them than traditional gifts.
Technology plays a significant role in the value and convenience of gift cards. Digital wallets make it easy to track gift card balances and earn rewards. Over 80% of the respondents said they would be happy to use a digital wallet to store gift cards if there was an incentive involved, such as another gift card, loyalty points, or early access to promotions.
Both merchants and consumers can benefit from gift cards. Retailers can increase customer foot traffic and retention as well as sales by promoting a rewards program or other incentives to buy a gift card. Consumers get a seamless, hassle-free way to take care of their shopping list and ultimately use any built-up loyalty points on gifts for themselves.Despite financial concerns, consumers are likely to spend more during the 2024 holiday shopping season. Of the Fiserv survey respondents, about 33% plan to spend more this year on gifts, while only 27% said the same thing in 2023.
Discussion Questions
How do you think the current economic pressures, such as tighter budgets and rising prices, are influencing the growing popularity of gift cards during the holiday season?
In what ways are younger generations, like Gen Z and millennials, shaping holiday shopping trends by allocating a larger portion of their budget to gift cards?
What role does technology, particularly digital wallets and reward programs, play in enhancing the value and convenience of gift cards for consumers and retailers alike?
Poll
Loading …BrainTrust
James Tenser
Retail Tech Marketing Strategist | B2B Expert Storytelling™ Guru | President, VSN Media LLC
Lisa Goller
B2B Content Strategist
Carol Spieckerman
President, Spieckerman Retail
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Gift cards will not completely dominate the season. However, our surveys show that more people are planning to give them this year compared to the past two years. One of the main reasons for this is because in more constrained times, givers want their gifts to be useful. That means random fripperies that end up in the back of a drawer are out; practical gifts are in. I also think there is an element of it becoming more difficult to know what people want of holiday presents, so gift cards are a way around that.
Gift cards are the gift that keeps on giving. The light stigma associated with dollar disclosures has long since passed. Retailers and brands benefit as card redemptions drive incremental sales (or as cards aren’t redeemed). Gift givers shed the worry associated with picking the perfect gift. Recipients can make decisions based on budgetary constraints or wish lists. It’s all good.
Well, it’s important to remember that they actually depress sales when they are bought. They’re actually a payable for the retailer until they are redeemed. That’s one reason January has become a thing, sales wise. Gift card redemption.
Gift cards are easy to choose, easy to purchase and easy to tuck into an envelope that arrives on time for the holidays. Shoppers have no worries about color, size, or style, and no frustrating returns to worry about.
Retailers and issuers get their guaranteed profits (fees) paid up-front, and a percentage of abandonment and loss provides some secondary profits. At the very least, they amount to a portfolio of tiny interest-free loans to the issuer.
These traits make gift cards an important part of seasonal sales, to be sure. But they are not going to dominate the season entirely, I think because they convey limited emotion. Parents still want to see their children joyfully open physical gifts. A warm sweater, an item of jewelry or a hand-made quilt still send a message from the giver beyond its intrinsic value.
For our digital-native recipients, the cards themselves may seem like an antique concept. They can be misplaced and they may require a visit to a (gasp!) physical store. Instead they may prefer to receive a digital gift from a favorite site – if not Amazon.com or Walmart.com, maybe from an online seller that the giver knows they frequent.
For retailers, gift cards tend to stretch out the holiday season in a way. Although they bank the revenues before, they may be fulfilling orders for weeks after the holidays are over. This requires an adjustment in merchandise planning, I think. Demand may be different once the holiday frenzy dies down. As the proportion of gift card sales increases, retailers had best be prepared to make needed adjustments.
Current economic pressures influence gift cards’ popularity, as consumers can often choose the exact amount of money they want to put on a gift card. They can choose variable amounts according to their budgets.
Gen Zs and Millennials shape holiday shopping, as a growing number of gift cards cater to younger shoppers. The broad assortment of retailer gift cards include beloved brands like Starbucks, Sephora and Fanatics.
Gift cards probably won’t “dominate” the holiday gift season, but they’ll continue to be a popular gift for co-workers, casual acquaintances, holiday parties, and Uncle Bill.
Research indicates that most people see gift cards as impersonal, especially if they’re from Amazon, Visa, or MasterCard, or others more vague and less personal. With these, you are asking the recipient to do their own shopping.
In contrast, gift cards from specific restaurants, stores, spas or specific types of category-stores, i.e., sporting goods, bakeries, music, etc.
Most people still appreciate a thoughtful gift wrapped in holiday paper, especially for family members, close friends, bosses, etc.
Gift cards can be used to relieve the stress of gift giving in financially-difficult times. However, a retailer-branded gift card is limiting in that the recipient may not shop that retailer and would prefer to use the value of the card to shop elsewhere. Unless there is a specific benefit to the gift giver, I see a ‘general purpose’ gift card (such as bank-provided gift cards, as more practical to the recipient.
As with any gift, one size does not fit all. Gift giving is a very personal experience for me, perhaps due to my merchandising DNA – finding the right gift for every individual is both a chore and a delight. In many cases with nieces and nephews who are early in their adult journey, a generic gift card is a greatly appreciated offering as they can use it as they see fit, often for after Christmas deals or even groceries. For others, who place great value on the thought and the experience of receiving, unwrapping and thanking, it a gift card is seen as a lack of care. As always, I will be selecting, creating, wrapping and sending right up to the last minute! And grateful for electronic gift cards!
I don’t think gift cards will dominate the season but I do think they are important. I also think it’s Important for retailers to push them.
If I buy you a gift you love, you have no reason to visit that store, but if I give you a gift card, you have to visit to redeem it. And if the gazillion studies done on gift card purchasing are true, you are likely to spend more than the face value of the card and take more than one visit to redeem it. That’s a big win to me.
Gift cards are an easy and flexible way to give a gift without overspending. Gen Z and millennials are driving this shift—they prefer convenience and know how to maximize rewards. Technology, like digital wallets and reward programs, makes gift cards even more appealing. It’s easy to store, track, and use them, which benefits both shoppers and retailers by boosting convenience and loyalty.
I have mixed feelings about gift cards. On the one had, just get the brand or store right and Bingo! you have a well received gift. On the other it reeks of a “I did not have the time or the energy to think about you in a real way so take this card” attitude or, worse, a lack of imagination or unwillingness to take a chance on getting it wrong. Finally, my wife is a school teacher and she gets a lot of gift cards come Christmas and end of year, and you know what? Most of those cards go unused for YEARS before we remember that there is $10 in the gift card folder for the local ice cream shop that just went out of business.
Which makes me think gift cards are a cash flow racquet for many issuers. But there I go getting cynical!
In addition to economic concerns and rising prices, the shortened holiday season will also contribute to the increase in gift card sales this year. With fewer days to shop and more options than ever, gift cards are a safe bet, ensuring recipients can pick out an item they truly need or want without guilt.
Gift cards have also come a long way, with personalization options and pre-scheduled electronic delivery making them even more accessible to buy and use. With more than half of eCommerce sales projected to be completed on mobile devices this holiday season, the convenience of seamlessly adding gift cards to digital wallets is another big selling point. You will rarely meet someone disappointed in receiving a gift card.