As the holiday season approaches, retailers and consumers alike are thinking about perfect presents. One option that consistently stands out is the gift card. Gift cards have become a firm favorite, with the global gift card market expected to grow to $3.09 trillion by 2030 (up from $984 billion in 2023).

Why Shoppers Love Gift Cards, Especially During the Holidays

Gift cards offer an ideal solution for consumers who want to give something thoughtful without the risk of buying something the recipient may not like.

1. Flexibility: For many, gift-giving is fraught with stress over what to choose. Their loved ones may be difficult to buy for, or the growing ‘Secret Santa’ tradition in workplaces means they’re buying for colleagues who they don’t know outside of the office. A gift card is the perfect answer – reassuring the giver that the recipient will have they’ll truly appreciate.
2. Convenience: Shoppers face challenges with gift shopping – crowded stores in holiday season; the postage cost of sending gifts to loved ones far away, or that awful last minute realisation that a birthday or celebration is the next day. So it’s not surprising that (52%) of shoppers say they buy gift cards because it is so convenient. Gift cards allow consumers to easily make a quick but thoughtful purchase, especially if the retailer offers digital gift cards, which can be sent instantly via email or text message.
3. Budget-Friendly: Consumers often face budget constraints during the holiday season – and gift cards mean they can choose the amount they want to spend and stay within their budget. Why Gift Cards Are Great for Retailers

While shoppers appreciate the convenience, gift cards are also a strategic asset for retailers, particularly during the peak holiday season.

1. Boost Sales and Increase Customer Traffic: Gift cards can generate higher sales, driving foot traffic into physical stores or websites, where 61% of consumers spend more than the initial value of the card.
2. Attract New Customers: Gift cards are an excellent way to introduce a new customer to a store or brand. A recipient who receives a card may not have shopped at that retail store before, but once they come in to redeem it, they have the potential to become a loyal customer.
3. Deferred Revenue: When a customer buys a gift card, the retailer receives the cash upfront, boosting cash flow during critical periods like the holidays. Inevitably, some gift cards are not redeemed – in the US for example, 47% of adults have unused gift cards – worth around $23 billion– money that contributes to retailers’ profits.
4. Marketing and Brand Loyalty: Gift cards put your store’s name directly in the customer’s wallet or inbox, keeping the brand top of mind. If a retailer personalizes gift cards, they can increase customer loyalty and repeat purchases by 45%.

Managing Gift Cards: The Importance of Integration

While gift cards offer tremendous potential, managing them can present challenges for retailers. However, the right retail POS system, with integrated gift card management, can make all the difference.

1. Seamless Transactions: A retail POS system with integrated gift card management functionality allows retailers to issue, track, and redeem gift cards efficiently, online or in store or on mobile. This means faster transactions, fewer errors, and a more engaging customer experience.
2. Retail business analytics: A retail POS system that tracks gift card usage can provide valuable data. Retailers can analyze customer purchasing behavior, identify popular items bought with gift cards, and even send follow-up offers to customers after they’ve redeemed a card. This allows for deeper insights into customer preferences and more targeted marketing efforts.
3. Mobile digital passes for convenience: A digital pass software app allows customers to store their gift cards digitally, making it easier to redeem them, and eliminating the risk of misplacing a physical card, providing added convenience for both the retailer and the shopper.

Gift cards offer consumers flexibility, ease, and the ability to manage their budget. For retailers, they drive sales, attract new customers, and offer opportunities for branding and customer loyalty.

Having gift card management integrated into your retail POS system is the key to managing the process efficiently and ensuring you and your customers get all the benefits of the gift of gift cards.

FAQs

Do all POS systems have integrated gift card management?

No – POS systems vary quite widely in terms of the functions they have built-in to the system. If your POS system does not have gift card functionality, you will have to purchase a separate gift card module – and undertake a significant piece of work to get the two systems talking to each other.

A retail POS system such as iVend, which does have gift card functionality as an integral part of the system, means that you can get up and running with your gift card program faster, and get the benefits of faster transactions, analytics and a digital app.

Will gift cards continue to be popular?

Whilst we don’t have a crystal ball, two facts mean that gift cards are likely to be popular for a while to come. Firstly, the biggest growth in gift card popularity is amongst millennials, who are likely to be spending for some time to come. Secondly, gift card sales have defied the cost of living crisis, continuing to grow even when shoppers are cutting back in other areas.

Content Sources:

Capital One Shopping

World Metrics

Data Bridge Market Research

Forbes