How will the gift card evolve over the next few years?
Despite an economic situation with ups and downs, the gift card market has continued to grow. Boosted by the arrival of the digital version: the e-card, the market haseven experienced double-digit growth for several years now. A trend that showsno signs of slowing down, as the gift card is becoming more entrenched both inconsumer gifts and in the strategies of brands and retailers. Let's take acloser look at what is shaping up for the market and the existing programs.
More and more omnichannel
Even today in France, as in Europe, physical gift cards remain predominant. However, the share of e-gift cards has been increasing more rapidly in recent years (especially during the pandemic). This suggests that it will eventually surpass physical cards.
This is a definite trend with the arrival of millennials in the workforce. This generation has grown up in the digital era, where it is the default choice. Incontrast, the previous generation prefers the physical format, which is more reassuring for them.
That being said, e-cards are beginning to be embraced by Generation X and baby boomers.Some of the more seasoned individuals among them opt for the digitized version,and overall, they expect to have the choice. This means that for a physical card purchased, they also want to be able to save its digital version on their phone or other digital devices. They, therefore, desire an omnichannel gift card.
It's worth noting that more and more brands and retailers are expanding their gift card services to include e-cards. This is primarily to attract millennials. However,in the future, the e-card will be an essential tool in their strategy to re-engage these customers in their physical stores through acquisition,engagement, and loyalty strategies.
On the consumer side, the growing adoption of e-gift cards in marketing operations results in an expectation of immediate conversion of loyalty points into e-cards that can be used instantly. Promotions on gift cards are becoming increasingly attractive, offering consumers a favored means to boost their purchasing power, which is particularly important in the current context.
A growing B2B share
Currently,the B2B gift card market (multidiffusion/reselling) represents between 40 and60% of program revenues. However, the share of B2B is expected to significantly increase and surpass B2C in the coming years (70-80%).
This grow this fueled by the growing demand from employee committees, which are increasingly prioritizing the well-being and motivation of their employees. The share of employee committees is approximately 60% of multidiffusion/reselling revenues in France.
On the other hand, more and more loyalty platforms, consumer incentive programs,cryptocurrency, and others are looking for brand-specific single-store e-gift cards to enrich their catalogs. This is an opportunity for brands to diversify channels and revenues in their strategy.
However,it's crucial to work on your strategy in the coming years (leveraging key events, creating visibility campaigns within the platforms of partner distributors, establishing a commission policy, distributed amounts, etc.), as more and more brands are entering multidiffusion.
Another point in your favor is having an API. Distributors and resellers are all moving towards 100% API in the coming years to reduce financial and security risks andavoid time-consuming tasks.
For rapid growth in multidiffusion, aggregators offer extensive networks of distributors.
Technological developments on a balancing act
The arrival of the e-gift card has deeply changed the market, as it has brought with it a host of new features. The most important change between the physical card and its digital version is without a doubt the waiting times which have been reduced from a few days with manufacturing and delivery to nearly a few minutes.
The dematerialized gift card has thus opened up new possibilities and allows the market to benefit from the latest technological developments. The latest one for the card is the mobile wallet: a new storage medium for consumers and a new communication space for issuing brands with push notifications.
In the years to come, technological developments will enable the move towards more personalization to create a unique experience and restore the noble values of the gift, which already had been made possible by photos, messages, personalized videos and group purchasing, for example.
The gift card will also move towards something more experiential, not so much in terms of “packaging” but in terms of the ability to share the experience with those around you. This stage has not been much exploited by gift programs at the moment.
Another important point it that the gift card still remains a means of payment. Therefore, like every other payment option, the transaction stage is now crucial and must be really thought out for retail and e-commerce because of the very important consequences it may have.
Technological developments are all in line with speed, immediacy and fluidity. However, another equally essential point comes into play: security. A balancing act is being played out between the two and it has a major impact on the gift card.
New emerging behaviours such as “self-use”
“Self-use” is the practice of buying a gift card for oneself. It is widespread in the US (59%) and the UK (47%). This means that the gift card is no longer considered a gift but a means of payment above all. For some, the gift card is a way to manage their budget with a predefined amount within a particular brand and for others, it is a more convenient means of payment. Finally, others also buy a gift card to get a discount: if a retailer offers a card worth €50 for €40, for example.
Those gift card’s uses are far from trivial and many others may emerge in the next few years and impact the evolution of the gift card.
A thriving Asian market
The North American gift card market is the most advanced one but Europe is catching up fast. The Asian market is also emerging at great speed. The adoption of the card and in particular the e-card is still in its early stage but the growth potential is exponential.
Two things point to the dematerialized gift card’s success. Asian countries have a strong gift culture rooted in their way of life. There are many opportunities to make a gift there unlike in Western countries.
Also, his mobile remains a real extension of the Asian consumer. In Europe, its use is rather occasional: on public transport, during breaks, etc. In Asia, on the other hand, the mobile phone is everywhere, all the time.
Moreover, with the development of mobile wallets and new features surrounding the e-gift card, the Asian market will tend to increase rapidly over the next few years.
Branded currency brings a new perspective
Self-use behavior shows how the single-brand gift card is not just a gift but a brand currency (or “branded currency”) because the value on the card can only be spent on one brand, very often for personal consumption.
Branded currency, a fairly new term, is nevertheless a strategic area that is becoming more important every year. A brand already has many branded currencies: reward programs, loyalty points, discount coupons, gift cards… These are accumulating and the challenge now is to create synergy between them all. There is a need to find a way to manage branded-currency in the best way to influence consumer’s behavior in acquisition and retention. Coupled with AI and social listening, this will become more and more complex and precise.
Among these, the gift card is particularly interesting because of its personalization and immediacy. This tool that is not yet widely used in marketing operations will evolve in the coming years.
It can be used across various departments: after-sales service, HR, marketing, etc. to achieve different objectives fluctuating over time. It is flexible, adaptable, changing with new technologies and increasingly relevant to consumers and their expectations.
The gift card service will most certainly become the cornerstone of branded currency strategies.
If we take a step back, we moved over the last decades from paper gift vouchers to a physical card, then from a physical card to an e-gift card. A beautiful evolution that is not over yet. The gift card has demonstrated that it is more than a gift and more than a transactional means of payment. It is now converging towards relational and much more.
