Products & Services
The Covid boom in online sales of gift cards and eVouchers
Shoppers are splurging on digital gift cards and eVouchers amid concerns over store visits during the Covid pandemic. Mohamed Dabo reports
According to the latest analysis by the Gift Card & Voucher Association (GCVA) and KPMG UK, digital gift card and eVoucher sales grew by 117% during the second half of 2020.
Gift card sales—both physical and digital cards—typically spike during the holiday season. They make easy gifts for hard-to-shop-for family members—but the coronavirus pandemic fuelled even more sales for digital gift cards.
Sales of physical gift cards, on the other hand, declined by 9.8% as the stores selling them were mostly closed in key Christmas shopping months.
Overall sales via online channels grew strongly across both Business to Consumer (B2C) and Business to Business (B2B).
While online B2B gift cards and vouchers saw 34% growth year on year, online B2B saw growth of 292% year on year highlighting the resilience of the growing market.
The market share for digital products doubled in the second half of 2020 to 32.5% (from 16.6% H2 2019).
The research found that sales across all other channels declined in 2020, reflecting the switch to online shopping during the pandemic.
Direct sales declined significantly for both retailers and leisure operators.
Retail sector sales grew by 14.4% but leisure sector sales declined by 47.8%
Leisure operators took the biggest hit with B2B direct sales declining by 74% - significantly higher than the retailers B2B decline of 14.3%.
Store specific gift cards have increased in popularity, now making up 60.4% market share of sales.
While sales of open loop cards make up the largest like-for-like growth in 2020 (19.5%) for redemption types, closed loop purchases remain the most popular by value (£1.1bn) and have grown by 15.1% over the year.
According to the most recent GCVA figures, customer redemption rates remain high, with more than half of shoppers redeeming their gift cards within one month, and 98.6% within a year of receipt.
B2B growth shows that gift cards are no longer a consumer-only product
‘’We have seen an impressive growth story in the gift card and voucher market over the last 4-5 years, and this £7bn UK industry presents a real opportunity for retail and leisure businesses, as well as the wider economy, to grow,” said Gail Cohen, director general at the Gift Card and Voucher Association.
She said gift cards have also had a key part to play in delivering free school meal programmes across the country.
“The growth and resilience of B2B sales demonstrates that this industry has progressed significantly in recent years and is no longer the outdated consumer-only industry we think we all know,” she said.
With the retention of employees top of mind for many businesses – especially with the furlough scheme continuing – finding innovative ways to reward staff will only grow in importance. Indeed, the GCVA has recently launched the #giftcard500 initiative, calling for the increase in the tax-free employer gifting allowance from £50 to £500.
Commenting on the latest figures from a retail-perspective, Paul Martin, UK head of Retail at KPMG, added: “Performance in the gift card and vouchers market very much mirrors the activity that we have seen on the high street over the last year, with sales of physical cards bought in store falling as digital gifting saw impressive growth.”