When cash flow is under pressure, gift cards may be the answer.
On this year's agenda, we’ve all been addressing the uncertainty brought upon us by COVID-19’s disruption of vital supply chains and its impact on the retail industry.
The aftereffect of the pandemic may have predicted a 2022 holiday horror movie, with its factory shutdowns, shipping backlogs, and labor and inventory shortages all caused by a quarantined society and further hit by unexpected online consumer growth.
As retailers navigate through radical and unprecedented changes in the consumer landscape, GoGift, a market leader within the gifting space, finds that retailers can greatly benefit from the behavioral effect of choice eliciting equity in retail.
The beginning of this year came with geopolitical unrest and a trajectory of inflation, suggesting unstable markets, as fuel and energy prices surged and a lack of raw materials persisted. Yet, in a time of crisis, where consumers are supposedly holding back, gift cards are becoming the most requested gift, with 71% of consumers reporting a preference for multi-voucher gift cards. Gift cards have become a popular, economical, and flexible gift alternative helping the local shopping landscape survive.
As a business, whether online or physical, the biggest struggle is attracting new customers.
Gift cards help draw in shoppers by driving top-of-mind brand awareness and affordable customer acquisition. Consumers with gift cards already have a paid-for reason to explore your offerings, and in a way, they feel like they are getting something for free. Why? Because they aren’t buying something, they are choosing a gift. Retailers can significantly profit from gift card sales.
For retailers, macroeconomic factors triggered a cut in supplies, expecting demand to decrease, but instead, e-commerce skyrocketed, and retailers responded by increasing inventory. Despite the increase, stockouts continued due to supply chain issues. Brick-and-mortar shops were hit the hardest, while online shops grew exponentially. The current consumer trajectory predicts more hardships within supply chains, and with this pressure, consumers are more likely to opt for a gift card when items are out-of-stock.
The National Retail Federation states that “total gift card spending is expected to reach $28.6 billion, compared with $28.1 billion in 2021. Similar to last year, holiday shoppers plan to purchase between three to four gift cards and spend an average of $51.47 per card ($165.87 per person).”
GoGift saw this as a well-appointed opportunity to hit the retail market with their “Super Gift Card” at some of the largest Scandinavian retailers. Although retailers can’t guarantee gift-card revenue until the gift card is redeemed, with 20 years in the gifting industry, GoGift’s data showcases that most gift cards tend to be redeemed within three months of purchase. For retailers, this means money is directly transferred into retail, further creating equity for the business. For brick-and-mortar, the freedom of choice involved with a multi-branded gift card allows for an influx of support for local shopping as the “Super Gift Card” can be redeemed into various local restaurants, experience providers, and local shops.
GoGift encourages retailers to take advantage of the added value gift cards can provide, considering shoppers often spend more than what their gift card is worth. Research shows that up to 90% of consumers are willing to pay more than the dollar amount on a gift card. This makes gift cards the perfect tool to engage shoppers and buy something they’ve been eyeing at what they perceive as a discount since they already have a partial payment.
With GoGift, gift-giving is convenient, as the physical arrival of their multi-brand gift cards allows recipients to choose from thousands of brands wherever they live. GoGift still strives to encourage digital gift card purchases as a sustainable alternative to physical cards, but studies show that 90% of consumers consider physical gift cards more appropriate for gifting.
Retailers laden with a looming recession can now depend on gift cards for anything from returns to warranties and even replacements for out-of-stock items. Gift cards open the door to business growth, setting up a buffet of options for a new customer base and helping take advantage of seasonal shopping patterns.
As we count down to 2023, unknowing what the future has in store, GoGift makes gifting a whole lot easier, helping local and global retailers combat crises with the perfect gift: the one you get to choose.
Since 2003, GoGift has been optimizing the gift card market, providing innovative gifting solutions to more than 15,000 businesses worldwide. For any global gifting, reward, or incentive need, GoGift's got you covered. Learn more at global.gogift.com.