Retail news that keeps industry pros in the know
Retail Brew delivers the latest retail industry news and insights surrounding marketing, DTC, and e-commerce to keep leaders and decision-makers up to date.
’Tis the week of holiday-shipping deadlines. Nordstrom and Saks Fifth Avenue, for two, marked December 16 as the last day shoppers could put in online orders to get their gifts by Christmas (without paying exorbitant shipping fees)—but there will always be procrastinators. Jam-packed stores are always an option. So are gift cards.
And they’re more popular than ever.
Gift cards ranked in the top three online categories this season (behind toys and video games), according to Adobe—sales increased 263% from November 1 to December 9, compared to September.
- Shoppers plan to buy 15 gift cards on average during the holidays, a number up 50% from 2020 and 200% from 2019, per branded payment service Blackhawk.
Backed up: Not to blame everything on the supply chain, but in this case, it has played a role.
“The front-page coverage [of the] crisis has people defaulting to just giving gift cards,” Tyler Higgins, retail practice lead and managing director at AArete, told Retail Brew.
Out-of-stock messages showed up 2+ billion times in October alone, an increase of more than 3x since 2019, per data from Pitney Bowes. When that’s the case, one in four shoppers will opt for a gift card instead, the company found in a holiday survey.
- “Because who has time to find a second ‘perfect’ gift?” said Vijay Ramachandran, the company’s VP of marketing strategy and planning.
Cashing in
All those gift cards are A-okay by retailers. Not only are they a way to combat the aforementioned supply-chain issues, but gift cards can help draw in shoppers.
“This is great for them as they attract new customers,” Deborah Weinswig, CEO and founder of Coresight Research, told Retail Brew. “If the customer has a great experience, you might have had the cheapest customer acquisition cost ever.”
- Chipotle’s VP of marketing, Stephanie Perdue, echoed as much, adding in an email that “gift cards drive top-of-mind brand awareness.”
Added value: Those shoppers often spend more, too. A Blackhawk study found that 60% of consumers tend to shell out more $$ than what their gift cards are worth.
But companies are crossing their fingers that people remember to swipe them. Retailers can’t guarantee gift-card revenue until it is actually redeemed, Higgins explained.
- More than half of US adults forget to use gift cards, leaving around $15.3 billion in value on the table nationwide, he noted.
Looking ahead…Higgins believes gift cards will only gain momentum and see “double-digit growth” percentages in the years to come.
“Being able to give a gift virtually has changed the interaction with gift cards and also has changed the perception of people in receiving it,” he said.
And the opportunities are there for companies beyond gift-card favs like Starbucks. Weinswig told us that instant-commerce players like Gopuff have a chance to do more in the space. “That’s where I think this is going.”