How Retailers Can Improve a Booming Part of Their Businesses
Digital gift card giving is a booming business and is projected to grow 23% by 2025 — more than 2.5 times faster than overall gift card sales, according to a recent study by Incisiv, a Jacksonville, Fla.-based firm that helps retailers and brands navigate digital disruption.
The gift card market is a $160 billion industry that represents a significant source of revenue for U.S. retailers. While growth in physical gift cards was 9% in 2019-2020, COVID-19 has accelerated the adoption of digital gift cards, as mobile and digital gifting increases and a younger demographic embraces e-gift cards, Incisiv learned in its recent study, “Evolution of Gift Cards in Retail: From Transactions to Engagement.”
As the gift card market shifts to a digital-first mindset, retailers must improve their digital gift card capabilities or risk being left behind, Incisiv stressed in the study, which pinpoints four areas of transformation that must be improved for retailers to realize the full value of their gift card programs:
• Reduce friction by allowing faster, seamless purchase and redemption of e-gift cards. Twenty-four percent of retail digital gift cards evaluated take more than 24 hours to deliver. In addition, an average of 75% of retailers do not enable gift cards to be added to the user’s mobile wallet. Physical gift cards don’t fare much better, as 60% take more than 10 days to deliver by mail. Retailers are failing to meet shopper expectations for speed, convenience and simplicity, according to Incisiv.
• Improve omnichannel capabilities by enabling purchase, transfer and redemption of gift cards across all channels. Eighty-eight percent of retail e-gift cards can’t be sent via a text message — a clear miss in a mobile world — and 17% of retailers don’t allow omnichannel gift card redemption, according to Incisiv, which states that these retailers must do a better job of integrating mobile, digital and physical channels or risk losing shoppers that expect a seamless experience.
• Enable greater personalization so shoppers can customize gift cards and make them more personal. The vast majority of retailers that offer e-gift cards allow the cards to incorporate personal messages, photos and videos, but they can improve the range of templates, designs and occasions for gift cards, Incisiv said.
• Provide recommendations that drive smarter sales with curated gift card options and relevant products. Seventy-six percent of retailers don’t suggest gift cards in the search bar or suggest product options based on a gift card type — for example, suggesting diapers if shoppers are gifted with a “new baby” template, Incisiv learned, stressing that retailers are clearly leaving money on the table by failing to make relevant product recommendations.