JACKSONVILLE, Fla.--(BUSINESS WIRE)--The $160B gift card market represents a significant source of revenue for U.S. retailers and restaurant brands, and while growth in physical gift cards was 9 percent in 2019-2020, digital gift card adoption is projected to grow 23% by 2025—more than 2.5X faster than overall gift card sales. COVID-19 has accelerated the adoption of digital gift cards, as mobile and digital gifting increases and a younger demographic embraces eGift cards. However, as the gift card market shifts to a digital-first mindset, retailers and restaurant brands must improve their digital gift card capabilities or risk being left behind.
These findings are from Incisiv’s new benchmark research studies, “Evolution of Gift Cards in Retail: From Transactions to Engagement,” and “Evolution of Gift Cards in Fast Casual Restaurant: From Transactions to Engagement,” commissioned by GiftNow. While the analysis uncovered that the fast casual restaurant industry is trailing the retail industry across most major areas, each study pinpoints four areas of transformation that must be improved for retailers and restaurants to take realize the full value of their gift card programs.
- Reduce friction by allowing faster, seamless purchase and redemption of eGift cards. 60% of restaurant and 24% of retail digital gift cards evaluated take more than 24 hours to deliver. In addition, an average of 75% of retailers and restaurant brands evaluated do not enable gift cards to be added to the user’s mobile wallet. Physical gift cards don’t fare much better, as 60% take more than 10 days to deliver by mail. Retailers and restaurants are failing to meet shopper expectations for speed, convenience and simplicity.
- Improve omnichannel capabilities by enabling purchase, transfer, and redemption of gift cards across all channels. 94% (fast casual restaurant) and 88% (retail) of eGift cards can’t be sent via a text message—a clear miss in a mobile world—and 17% of retailers don’t allow omnichannel gift card redemption. These retailers and restaurants must do a better job of integrating mobile, digital and physical channels or risk losing shoppers that expect a seamless experience.
- Enable greater personalization so shoppers can customize gift cards and make them more personal. The vast majority of retailers and restaurants that offer eGift cards allow the cards to incorporate personal messages, photos and videos, but they can improve the range of templates, designs and occasions for gift cards.
- Provide recommendations that drive smarter sales with curated gift card options and relevant products. 76% of retailers don’t suggest gift cards in the search bar or suggest product options based on a gift card type—for example, suggesting diapers if shoppers are gifted with a “new baby” template. It is far worse with the restaurant industry as no major brands evaluated (0%) suggest gift cards in their search bar. Retailers and restaurant brands are clearly leaving money on the table by failing to make relevant product recommendations.
“Retailers can still derive tremendous value from gift cards, but in an increasingly digital world, it requires new thinking. They must understand how their gift card capabilities need to mature to support this 'new normal,” said Dan Farrell, general manager of gift cards at GiftNow, a Synchrony Solution. “Gift cards need to be positioned in e-commerce with deeper attributes which are integrated with the search, and recommendations engines that account for things like special occasions. Embracing this type of new thinking in this new normal will deliver significant enhancements to the gift card shopping experience.”
Click here to download the “Retail Outlook - Evolution of Gift Cards: From Transactions to Engagement.” The research study is based upon assessments of 75 top retailers and 45 digital attributes conducted in January and February 2021. Click here to download the “Restaurant Outlook – Evolution of Gift Cards: From Transactions to Engagement.” The research study is based upon assessments of 50 fast casual restaurants and 45 digital attributes conducted in January and February 2021. Additional details on both reports are available from GiftNow, the research underwriter.
GiftNow, from Loop Commerce, a Synchrony solution, is a holistic Gift Experience Management (GXM) solution that takes the friction out of gifting. With GiftNow’s purpose-built GXM platform, gifters can send personalized digital gifts and gift cards in seconds and recipients can exchange or modify their items before they ship, benefiting gift givers, recipients, corporate gifting programs and retailers. GiftNow is used by premium specialty and department retailers across the United States. For more information, please visit www.giftnow.com.
Incisiv is a next-generation industry insights firm that helps retailers and brands navigate digital disruption in their industry. Incisiv offers consumer industry executives responsible for digital transformation a trusted platform to share and learn in a non-competitive setting, and the tools necessary to improve digital maturity, impact and profitability. More information is available at incisiv.io.