Despite an irregular economic situation, especially in the last year, the gift card market has continued to grow.
Driven by the digital version: the e-card, this market has even experienced a double-digit growth for several years now. A trend that will not go away as the gift card is becoming more anchored in both consumers gifting and brands and retailers’ strategies.
Let’s take a look at what’s on the horizon for the market and the programs in place.
In France, as in Europe, the physical gift card remains even today in the majority. However, the e-gift card share is growing faster in the last few years. This suggests that it will eventually replace the physical card in the future.
This trend is confirmed by the millennials entering the working life. Digital represents the basic foundation of this generation born in this era unlike the previous one, which prefers the more reassuring physical format.
That being said, Generation X and baby boomers are starting to embrace the e-card. Some of the most experienced ones choose the dematerialized version, and most of them expect to have the choice. This means that for a physical card purchase, they also want to be able to register its digital version on their phone or other digital terminals. Therefore, they want an omnichannel gift card.
It should be noted that more and more brands and retailers are opening up their gift card services to the e-card, mainly to attract millennials. But tomorrow, the e-card will be an essential tool in their brand strategy and a service expected by consumers.
A growing B2B share
Today, the B2B gift card market represents between 20 and 25% of programs revenues. However, the B2B share will grow significantly and reach a balance with the B2C market within the next ten years.
This growth is driven by the growing demand from works councils, which focus increasingly on their employees’ well-being and motivation. The multiplicity of reward and loyalty programs and consumers embracing it is also fueling this trend. Even if the physical gift card remains important, here too, the e-gift card is increasing as millennials enter working life.
Another important point is distribution. One of the B2B market’s greater dynamics is undoubtedly the increasing demand from third-party retailers for single-brand gift cards, whether it is physical or digital. This again goes hand in hand with the adoption and preference for the gift card as a reward or a gift.
Technological developments on a balancing act
The arrival of the e-gift card has deeply changed the market, as it has brought with it a host of new features. The most important change between the physical card and its digital version is without a doubt the waiting times which have been reduced from a few days with manufacturing and delivery to nearly a few minutes.
The dematerialized gift card has thus opened up new possibilities and allows the market to benefit from the latest technological developments. The latest one for the card is the mobile wallet: a new storage medium for consumers and a new communication space for issuing brands with push notifications.
In the years to come, technological developments will enable the move towards more personalization to create a unique experience and restore the noble values of the gift, which already had been made possible by photos, messages, personalized videos and group purchasing, for example.
The gift card will also move towards something more experiential, not so much in terms of “packaging” but in terms of the ability to share the experience with those around you. This stage has not been much exploited by gift programs at the moment.
Another important point it that the gift card still remains a means of payment. Therefore, like every other payment option, the transaction stage is now crucial and must be really thought out for retail and e-commerce because of the very important consequences it may have.
Technological developments are all in line with speed, immediacy and fluidity. However, another equally essential point comes into play: security. A balancing act is being played out between the two and it has a major impact on the gift card.
New emerging behaviours such as “self-use”
“Self-use” is the practice of buying a gift card for oneself. It is widespread in the US (59%) and the UK (47%). This means that the gift card is no longer considered a gift but a means of payment above all. For some, the gift card is a way to manage their budget with a predefined amount within a particular brand and for others, it is a more convenient means of payment. Finally, others also buy a gift card to get a discount: if a retailer offers a card worth €50 for €40, for example.
Those gift card’s uses are far from trivial and many others may emerge in the next few years and impact the evolution of the gift card.
A thriving Asian market
The North American gift card market is the most advanced one but Europe is catching up fast. The Asian market is also emerging at great speed. The adoption of the card and in particular the e-card is still in its early stage but the growth potential is exponential.
Two things point to the dematerialized gift card’s success. Asian countries have a strong gift culture rooted in their way of life. There are many opportunities to make a gift there unlike in Western countries.
Also, his mobile remains a real extension of the Asian consumer. In Europe, its use is rather occasional: on public transport, during breaks, etc. In Asia, on the other hand, the mobile phone is everywhere, all the time.
Moreover, with the development of mobile wallets and new features surrounding the e-gift card, the Asian market will tend to increase rapidly over the next few years.
Branded currency brings a new perspective
Self-use behavior shows how the single-brand gift card is not just a gift but a brand currency (or “branded currency”) because the value on the card can only be spent on one brand, very often for personal consumption.
Branded currency, a fairly new term, is nevertheless a strategic area that is becoming more important every year. A brand already has many branded currencies: reward programs, loyalty points, discount coupons, gift cards… These are accumulating and the challenge now is to create synergy between them all. There is a need to find a way to manage branded-currency in the best way to influence consumer’s behavior in acquisition and retention. Coupled with AI and social listening, this will become more and more complex and precise.
Among these, the gift card is particularly interesting because of its personalization and immediacy. This tool that is not yet widely used in marketing operations will evolve in the coming years.
It can be used across various departments: after-sales service, HR, marketing, etc. to achieve different objectives fluctuating over time. It is flexible, adaptable, changing with new technologies and increasingly relevant to consumers and their expectations.
The gift card service will most certainly become the cornerstone of branded currency strategies.
If we take a step back, we moved over the last decades from paper gift vouchers to a physical card, then from a physical card to an e-gift card. A beautiful evolution that is not over yet. The gift card has demonstrated that it is more than a gift and more than a transactional means of payment. It is now converging towards relational and much more.
Suggestions for further reading
How to launch a successful gift card program?
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