Gift cards self-use around the world

by | 17 Aug, 2021 | CUSTOMER EXPERIENCE

Now that some parts of the world are beginning their restart from managing the crisis to recovery and economies reopening, new consumer behaviors emerge: changing consumption patterns, shake-up of preferences, digital acceleration… They span all areas of life. Despite this irregular economic situation, gift cards remain a staple of gift-giving around the world, joined by the appearance of new trends such as the surge of self-use.

While we’ve all struggled with choosing the perfect gift for others, self-use is the practice of buying for oneself, such as gift cards, a relatively new phenomenon that has increased significantly over the past five years. Self-use growth has nearly tripled between 2013 and today, especially online, rising from a 20% participation to nearly 60%, mainly among Millennials and Generation X.

Discounts, loyalty points, convenience, to help budget shopping… Top drivers differ from one country to another. Let’s take a look at the different practices around the world.

The self-use phenomenon in the US

In the US, nearly 60% of the population use self-gift. Getting a discount is a top motivator for the Americans with an average amount spent of $38.

Those most engaged users of both physical and digital gift cards also enjoy self-use as a reward: to get spending-based rewards, like at Starbucks for example, or to trade hotel and credit card loyalty points for gift cards they use for themselves.

Acquiring gift cards for personal use also drives consumers’ decisions on where they decide to buy or go, particularly for clothes, movies, restaurants or other everyday spend categories.

Then, self-use also allows people banned from banking to make purchases.

In the US, fashion, supermarket and entertainment gift cards are the most popular categories for self-use.

The surge of UK self-use gift cards

47% of UK shoppers purchase gift cards to spend on themselves. The UK gift card market, estimated to be worth around £6 billion, is usually associated with gifting but shoppers are finding new and creative ways to use gift cards to match their lifestyles.

Millennials are most likely to purchase gift cards for self-use. 15% even claim to do this often. Those customers, who traditional retailers usually struggle to reach, are adopting this trend because it offers benefits they can’t get elsewhere.

Moreover, when it comes to self-gifting in the UK, convenience tops the list of things that would convince consumers, which can mean gift cards are preferred and easier to manage than other traditional means of payment or forms of discounting, like coupons for example. This trend is pretty popular among men.

Self-use is also a new way to budget consumers spending and save money, mainly used by women. With a gift card, the consumer is locked into a designated spending amount, which helps him to avoid impulse buying or unnecessary expenses. To go further, it can also help teenagers budgeting and becoming more responsible by managing their money.

What is happening in Europe?

In France, self-gifting is usually linked to a special occasion. It may be related to feeling down in the dumps, depressed, during an episode of stress, an increase in disposable income… Context matters. However, gift card self-use is still not really developed except on discounts: if a retailer offers a card worth €50 for €40, for example.

In Denmark, the gift card market keeps growing. The retail channel is led by international gift cards sales and self-use products such as subscriptions or gaming.

In the mature market with limited players that is Germany, the retail market size is high thanks to self-use. The gifting market is growing and self-usage is extremely popular there, especially when gift cards are bought online. Indeed, Germans love to buy online but are usually not equipped with credit cards. Convenience is therefore what motivates them.

What about the rest of the world?

While it is already well established in some regions of the world, the self-use segment is developing more slowly in others.

For example, the Indian gift card market has recorded a strong growth in recent years across retail and corporate consumer segments. Retailers have started realizing the potential of gift cards, not just as a gifting option but as a powerful tool to get customers to spend in their outlet by offering cards for self-use.

In South Africa, historically, the gift card market has recorded a steady growth with increased adoption in the self-use segment which is expected to gain significant market shares in the next few years.

One of the specificities in China is, without any doubt, its traditional gift-giving culture. They do not need special occasions to make gifts. They are given all year long, as a way to strengthen a relationship. Collective is very important in the Chinese society where the group takes precedence over the individual. Therefore, the self-use trend is not yet well established.

Finally, even if the gift card market in the United Arab Emirates is expected to be impacted across retail and corporate segments due to disruption caused by Covid-19 outbreak, certain segments, such as self-use, will gain significant market shares. This may be because UAE consumers are becoming more mindful of how they spend their savings and adopting new habits to save money.

Who is benefiting from this trend?

Both online and offline brands are benefiting from the self-use trend. Customers buying cards for themselves also help to drive loyalty. Indeed, almost 57% of self-purchasers say they visit a particular store or restaurant more often because of their gift cards. It also allows customer acquisition as many shoppers agree that a gift card would encourage them to shop at a store they wouldn’t normally visit.

Thus, brands who market their gift cards within distribution channels and programs producing a high level of self-use acquisition can take advantage of a greater market share. It can also allow to increase brand awareness and loyalty by getting consumers to load value on their branded currency before they decide to spend elsewhere.

Nowadays, consumers are equally as likely to purchase gift cards for self-use as they are to offer them to someone else. This means that the gift card is no longer considered a gift but a means of payment above all. Whether it takes the form of a reward for having accomplished a personal goal, to cheer yourself up when you are feeling down, because you have extra money to spend or just because it’s your birthday, hedonic consumption affects more and more people and represents a major issue for brands. This trend will grow and others may emerge in the next few years, continuing to impact the gift card evolution.

Suggestions for further reading

How will the gift card evolve over the next few years?

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