Are Gift Cards A Path To Retail Loyalty?

Gift cards, while they may seem like an impersonal gift, are more popular and desirable than ever.

In an era when shoppers want options, they receive high marks on holiday gift lists across generations and as new innovations continue to flood the market. They have also made the leap to the digital age, and are now an excellent option for online shoppers as well. However, gift cards aren’t just great for consumers — they are also a win for retailers. The gift of store credit creates a host of new opportunities for retailers to engage and deepen relationships with existing customers and card recipients alike.

A recent survey from Allison+Partners on behalf of MyPoints asked 1,050 U.S. adults to tell them about their preferences when it came to gift cards and holiday gift giving. Perhaps surprisingly, the majority (53 percent) of respondents — when asked what they would like to receive as a gift from a list of options — chose gift cards. The items were selected over other options such as apparel, books, toys and games, movies and videos, food and beverage and other items.

Females and baby boomers were the most likely to want to receive gift cards, at rates of 59.4 percent and 58.1 percent, respectively. Even more interestingly, when this same pool of people was asked if they would prefer to receive a physical gift from the categories listed above or a gift card, respondents indicated they would rather receive a gift card across every single category.

Apparel was the highest-ranking category in this regard, with 79.7 percent of respondents saying they would prefer to receive a gift card versus actual merchandise. Females again scored above the average in this regard, with 83.4 percent saying they preferred the gift card. Generation X ranked highest in their preference for a gift card in the following categories: apparel (88 percent), books (77.2 percent), movie tickets (75.4 percent) and outdoor supplies (74.3 percent).

While everyone likes the surprise and personal touch of a hand-wrapped sweater or a nice pair of socks, gift cards present options — and that is something modern consumers are very much accustomed to in the current economy. But as more and more holiday shoppers migrate online, the question is: Will shopper’s preference for gift cards remain? Is the experience of redeeming a gift card as fun when you’re not browsing in-store? According to the survey, perhaps.

When it comes to receiving gift cards, millennials prefer digital gift cards more than any other age group (33.3 percent), and a whopping 86.3 percent said they had actually received one in the past. Meanwhile, 68.4 percent (the lowest amount of any age group surveyed) of baby boomers said they have received a digital gift card. Across all age groups, the most appealing factors of digital gift cards were ease of overall use (84.7 percent), ease of redeeming (84.7 percent) and not losing them (78.6 percent). When it came to keeping their digital gift cards organized, millennials were much more likely (77 percent) than boomers (47 percent) to find that factor appealing.

When purchasing gift cards for others, the driving factors were ease of purchase (94.1 percent), being able to send gift cards to recipients via phone or email (87.7 percent) and not losing the gift cards (83.3 percent). Interestingly, in giving gift cards, male respondents found the ability to include a personalized video greeting or photo more appealing than females at 63.8 percent.

At first glance, for retailers, the idea of digital gift cards may seem less appealing, as customers do not need to come into a brick-and-mortar location and interact with the merchant’s products to redeem them. However, in a digital age, IP addresses and cookies from both desktop and mobile browsing sessions can give retailers all the information they need to retarget those customers with relevant ads for days and weeks following their initial digital visit. Merchants also gain valuable information from their session, including what categories they browse, size and color preferences, and whether they make it to a checkout window or not. All of this digital information is vital to creating more powerful online shopping experiences and getting better at engaging customers across all of their devices.

Another good piece of news for retailers is the fact that, of those surveyed, nearly 74 percent said they had at least one or two gift cards they had never redeemed, and 72.4 percent said there were two or fewer unused cards currently in their wallet. Millennials were the age group most likely to lose a gift card, at 28.5 percent, while the top reason for not using cards was that the recipient simply forgot.

While there are obvious benefits on both sides to giving the gift of plastic, as shopping habits continue to evolve and more people embrace — and even come to expect — a purely digital shopping experience, it will be interesting to see how gift cards maintain their popularity beyond the holiday shopping season.