Our research indicates consumer gift-giving rebounded big in 2021
Sure, “gift” is in the name, but with the growth in self-use and a financial tools, gift cards haven’t always been just for gifting recently. While prepaid products are valuable for their versatility, our latest gift card consumer research, which we use to identify year-over-year (YoY) trends reported by gift card shoppers, indicates that gifting is back in vogue.
With vaccines available for the bulk of the year, perhaps consumers felt safer gathering for gifting occasions (and with the lockdowns and furloughs ending, perhaps many felt more secure to direct their spending on others). Looking at the winter holidays alone, retail sales were up 14.1% in November/December 2021 over 2020, and 109 million more people reported they were traveling over 50 miles in the December 23 to January 2 timeframe.
Our research allows us to take a closer look at who consumers are gifting cards to, what cards they’re giving them and what trends to keep an eye on moving forward. In reviewing the numbers, we found that the giving of open-loop (branded to a specific payments processor and accepted wherever that processor is accepted) and closed-loop (branded for and only redeemable at a specific brand or store) both increased notably YoY, according to our quarterly gift card shopper research.
Gifting Branded Gift Cards
Extended family members were the big winners when it came to receiving closed-loop gift cards, jumping 14% after a similarly sized dip during the first year of the pandemic. Immediate family members and friends/acquaintances filled out the top spots.
A return to occasion-based gifting is supported by the regularity with which shoppers plan their gift card purchases. Almost half of participants said their closed-loop gift card purchases are always planned, and another third said they were mostly planned. Only five percent said they were mostly or always unplanned purchases.
It’s not surprising that these shoppers are planning their purchases given how confident they are in selecting the right gift. Overall, 88% said knowing the exact retailers, restaurants or services their recipient prefers is very or extremely important, while only 1% said this knowledge wasn’t important wasn’t important to them. With that knowledge comes the confidence that they can select the right card that results a meaningful gift; 87% said they were “very” or “extremely” comfortable picking out a card for someone else (a YoY increase of 14%), and that number jumped to 91% for immediately family. Virtually none of the respondents said they weren’t comfortable picking out the right card for someone else, family or otherwise.
While the majority of respondents said they purchase gift cards because they know what their recipient likes. Some also think they know what someone might like; those who choose to gift a card from a retailer, restaurant or service they want the recipient to try increased by 30% YoY.
If they can’t find the right card, more recipients in 2021 said they would be willing to ask for help finding it, while fewer would be likely to search another store or online for the card, or to purchase something other than a gift card.
Respondents who gifted an open-loop card to someone else nearly quadrupled compared to 2020, with increases in particular in gifts to immediate family members, with teachers and coaches and extended family members also seeing slight upticks. Those giving open-loop cards to family members reported increases in helping them with unexpected expenses and money management as the top reasons for their choice of gift.
Children were often the beneficiary of these gifts; nearly 40% of parents reporting they purchased network branded open-loop cards to their children, an increase of 63% YoY, with gifting as the most often cited reason for these purchases. Parents did list other financial motivations for giving these cards to their children, including allowance (up 28%), monitoring spending (up 24%) and limiting spending.
What’s in a Gift?
For both gifted and self-use cards, the top closed-loop sellers reflect the times: restaurant/dining returned to the top after a Covid-19-impacted dip in 2020, with online and big box retailers, grocery stores and home goods rounding out the top five.
Shoppers also expressed a willingness to explore a new gifting avenue – cryptocurrency. In a recent poll of gift card shoppers who were at least aware of cryptocurrencies, we found that nearly one-third of respondents had gifted cryptocurrencies to others, and another quarter had considered doing so. Almost 19% didn’t think gifting cryptocurrency was possible, highlighting the nascency of the capability – but nearly a third said they would be interested in learning more. Just as consumers have begun paying with crypto, so too may they start looking to gift it to the early adopters and technophiles in their lives.
With consumers in the mood to gift, retailers should keep in mind that these shoppers are planning their trips, know what they’re looking for, and have been in a giving mood since 2020. And both brands and retailers should know that gift card users are often spending over the value of the gift card once they redeem (39% for closed-loop, 43% for open-loop). All said, it’s more evidence that the right gift card program can keep shoppers coming in regularly and leaving satisfied.
Want to learn more about gift cards and the benefits of a single connection to InComm Payments? Contact us today.