Gift cards prove to be a game changer for retailers

Brands participating in multistore gift card schemes or offering their own gift cards are reaping the rewards, particularly from younger demographics like Millennials, who are embracing gift cards for their convenience and flexibility.

The latest research from the Gift Card & Voucher Association (GCVA) and Global Data highlights how gift cards are effective tool for channeling consumer behaviour by not only introducing new shoppers to brands but also encouraging them to 'upgarde' their purchase beyond the card's value.

The latest data in GCVA's State of the Nation Report reveals gift cards to be an increasingly effective way for retailers to attract fresh audiences. According to the research, 63% of gift card recipients discovered a new brand through their gift card. Among Millennials, this figure jumps to an impressive 74.6%, underscoring the power of gift cards as a customer acquisition tool. By integrating gift card offerings, retailers can effectively raise brand awareness and reach untapped markets. Gift cards don't just bring customers in—they encourage them to spend more.

The data shows that 61% of shoppers redeeming gift cards spend beyond the card's value, with many exceeding their balance by an additional £10 to £20. Consumers often use a gift card to 'upgrade' their purchase, going for a higher value item than they might have done previously. Gift cards are also helping to champion local businesses according to the research. Around 20% of shoppers purchasing gift cards for themselves cited the desire to support local enterprises as a key motivator.

This growing preference for community-focused shopping presents an avenue for smaller retailers to foster stronger customer relationships and bolster their local presence. The shift toward digital gift cards is further amplifying their impact, especially as a choice for Gen Z shoppers. The industry is witnessing a surge in digital adoption, creating new ways for brands to engage with their audience and influence spending habits. Also, encouraging gift cards to build relevance with shoppers who prefer digital shopping or to use mobile phones as their preferred payment method.

Hannah Shimko, Managing Director at the GCVA, commented: "Gift cards have evolved into a powerful tool for driving growth across the retail landscape. From introducing new customers to encouraging additional spending, their potential is enormous. As the shift toward digital solutions continues, brands that embrace this trend will be well-positioned to capitalise on these opportunities while supporting local businesses and building customer loyalty. "The findings showcase the untapped potential of gift cards in enhancing customer experiences, driving incremental sales, and fostering community connections, proving that this versatile tool is an essential asset for retailers navigating today's challenging market."