Gift Card Industry
To obtain 3-5 trends in the gift card industry. This information will be used in developing a strategy to capitalize on the gift card and digital gift giving space.
- The gift card industry includes "gift certificates, gift vouchers, gift tokens, and others, which are generally issued by a retailer or bank as a developmental strategy used for promoting businesses, attract new customers, increase brand awareness, reduce fraud and improve sales. "
- The global gift card industry was valued at $619.25 billion in 2019, and is expected to reach $1.92 trillion by 2027.
- Other estimates provide the market size to be $1 trillion in 2020, and is projected to reach $2.7 trillion by 2027, growing at a CAGR of 14.5% between 2020 and 2027.
- The U. S. accounts for over 26.9% of the global market at $278.8 billion.
Trends Shaping the Gift Card Industry
Rise in Digital Gift Cards/E-Gifting
- Progressively, consumers have been steadily shifting from "paper gift vouchers to digital ones."
- In 2017, about 65% of consumers bought digital gift cards without any advertising, compared to 33% of consumers in 2016..
- This year, in the U.K., "digital and eVoucher sales grew by 49.7% on a rolling year basis, while sales of physical gift cards continued to retreat. Indeed, the market share for digital products increased to 30.2% in the first half of 2020, up from 17.1% in the same period last year. "
- This trend was enhanced by the lock-down occasioned by the COVID-19 pandemic.
- The e-gifting segment currently accounts for 11% of the global gift card market and is expected to grow at a CAGR of 15.5% in the next 7 years.
Rise in Gifting Culture
- Gift cards are emerging as a popular gifting option for festive occasions and birthdays.
- Gift cards make for perfect gifts during occasions as "apart from buying personalized gifts, they can also be used in restaurants, grocery stores, supermarkets, department stores, specialty stores, and cafes."
- The rising number of family/work occasions, and the holiday seasons are becoming the biggest contributors to the sales of gift cards.
- For example in the U.S., "Thanksgiving, Christmas, and New Year holiday are the most popular festive seasons where gift cards are used for giving and receiving gifts."
- Globally, there are recorded sales surges for gift cards during festivals and other special days, such as Father’s Day and Mother’s Day.
Growth in the Open Loop Cards Segment
- The open loop gift cards are growing in popularity. For example, the Canadian open-loop prepaid market grew by 27% between 2015 and 2018.
- Globally, the open loop card segment is expected to exhibit the highest CAGR of 17.1% between 2020 and 2027.
Rise in Corporate Gifting
- Companies are increasingly using gift cards to recognize the contributions and achievements of employees, as they are considered convenient and safe, and novel.
- For example in the U.K., in the first half of 2020, "while business-to-consumer (B2C) sales fell significantly when compared to the same period in 2019 (-32.2%), business-to-business (B2B) sales – like those used by employers to reward staff – actually grew by 8.2%."
Increase in Product Categories for Gift Cards
- In order to stay ahead of the competition, companies are actively collaborating with technology solutions providers to launch gift cards.
- For example entertainment companies are launching e-gift cards for "content across major online and retail marketplaces;" and "electronic device manufactures are also launching gift card programs on their websites to increase the sales of products such as smartphones, smart devices, televisions, and accessories."
Proprietary Research Available
- Global Gift Card Market 2020-2024 (Technavio, $2,500)
- Research Topic: Market Segmentation by Type ($1,496.45)
- Research Topic: Drivers, Challenges and Trends ($2.012.50)
If you'd like us to purchase any of these reports on your behalf, just let us know!
Summary of Findings
- During this preliminary hour of research, we were able to provide several trends that are shaping the gift card industry.
- We have assumed a global focus. If a more targeted approach is desired, for example, the U.S., this would have to be clearly communicated to us in any reply.
Proposed next steps:
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