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Latest : Gift card sales remain resilient despite tough trading conditions

by on February 21, 2020 in Business, Latest News, Lead Article, News you can use, Nuggets

Latest : Gift card sales remain resilient despite tough trading conditions

 UK gift card and voucher sales continue to grow despite adverse trading conditions

  • Leisure continues to increase market share, reinforcing the growing consumer preference for experience over product ownership

  • Growth in digital gifting outperformed more traditional physical or paper alternatives, nodding towards the growing preference for added-convenience and the rise of enviro-conscious shoppers  

UK gift card and voucher sales grew by 1.7% on a rolling year basis (0.9% like-for-like) in the second half of 2019, despite the widely publicised challenges facing many consumer businesses, including shoppers putting off purchases in light of ongoing Brexit uncertainty1.

That said, the latest analysis by the UKGCVA and KPMG also reveals that leisure continues to challenge the dominance of traditional retail by increasing market share, with shoppers increasingly favouring experience over product ownership.

Sales of gift cards and vouchers continues to be dominated by traditional retail, still accounting for 62.8% of the overall market. However, the latest data sees leisure-related sales grow by 24% on a rolling year basis. Moreover, leisure now accounts for 11.5% of the overall market – a gain of 2.5% if comparing the second half of 2018 to the second half of 2019.

Commenting on the latest figures from a retail-perspective, Paul Martin, UK head of retail at KPMG, said:

“In a landscape where winning and maintaining customer loyalty is often the line between success and failure, retailers can’t afford to overlook the key role gift cards and vouchers play. That’s especially true given that growth of gift card sales remains so resilient, despite such volatile trading more broadly.

Leisure might be winning some more market share, but many retail players are actually recording double-digit growth of their gift card and voucher sales. 

“If anything, the rise in market share of leisure-focussed gift cards bolsters the argument that more work is required to make retail more experiential. Shopping is no longer deemed the leisure activity it once was and that needs to change.”   

Gail Cohen, director general at the UK Gift Card and Voucher Association, added:

“The challenges being faced by all consumer businesses have been painfully clear in recent months, whether it is record low retail sales figures or the latest business casualties. However, the clear resilience of gift card and voucher sales is testament to the importance of this avenue in generating additional revenue and boosting customer loyalty.

“As the latest figures outline, gift cards and vouchers hold a whole array of new avenues for consumer-facing businesses to consider or improve upon, whether it be business-to-business sales as organisations look at new ways to incentivise and reward their people; or reminding ourselves of preferable buying choices, like the growing popularity of experiences.

All consumer-facing businesses need to think beyond the traditional view of this growing market, as gift cards and vouchers are changing rapidly and offer a whole host of new opportunities.”

Additional key findings from the latest UK Gift Card and Voucher Sales Analysis and Outlook: H2 2019:

  • The business-to-business market grew by 12.7% year-on-year, continuing the strong performance in this avenue of sales, as noted last year2

  • There was a 13.7% like-for-like increase in sales of gift cards and vouchers to consumers online, reflective of the preferences of younger generations who prefer to shop online3. This is also being driven by the increased interest in leisure

  • ‘Open loop’ options have gained popularity, with market share growing from 3.6% last year to 5.6% this year. Having taken this market share from ‘multi-choice’ options, it’s clear that greater flexibility had become increasingly more important4

  • Digital products saw their market share rise by 5%, taking this from physical and paper alternatives. While convenience will have contributed to this shift, the consumer demand for more environmentally-friendly options will also played a part

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