Gift Cards Expected to Aid Retail Bounceback as UK Emerges from Lockdown

  • Retail footfall expected to leap to 50% of pre-COVID levels in coming weeks, following overseas figures 
  • Isolation has led to spike in demand for gift cards as social distancing transforms our gifting habits 
  • When redeeming a gift card, shoppers traditionally spend £18.55 more than the card’s original value on additional products. 

As the retail sector begins to reopen its doors following months of enforced lockdown, retailers that offer gift cards are predicted to see a boost in consumer spend as shoppers flock to spend the gift cards they have collected in lockdown, according to the latest forecasts from the Gift Card & Voucher Association (GCVA).

Due to the COVID-19 pandemic, consumers have increasingly been opting for gifting solutions that minimise contact, can be sent instantly, and enjoyed at a later date. This has led to a predicted spike in demand for the gift card industry, which is now worth £6.9 billion, according to GCVA research. This was particularly true for digital gift cards, which now represent 26% of all UK gift card spend, rising to 50% accounting for all gift cards spent online.

Recent GCVA research reveals that the worth of gift cards are felt well beyond the initial value of the card, with shoppers typically spending an additional £18.55 more than the average gift card value (£27.64) when spending their gift cards – an uplift of 67%. Subsequently a number of consumer-facing businesses, such as major retailers, hospitality brands and beloved local businesses, are expected to see an increase in spend over the coming weeks, driven by increased gift card usage.

Retailers that encourage their customers to spend their accumulated gift cards are also likely to benefit from retained customer loyalty in the coming months, with almost a fifth (18.5%) of consumers having become a regular customer of a brand or organisation after being given one of their gift cards.

This loyalty increases amongst a younger demographic, with 31% of Generation Z/Millennial (16-34 year-old) shoppers stating that they have become a repeat customer of a brand after having received a gift card for that business.

Not only did the recent opening of certain retail chains, such as Ikea, drive a 31% increase in footfall according to Springboard data, equivalent figures from across the continent also suggest that the coming weeks are set to see an almost instant boost as consumers flock back to the high street. Many countries that have already begun to lift lockdown measures, such as Spain, Italy and Germany, have already seen retail footfall return to approximately 50% of pre-COVID levels, according to Google data.

Finally, gift card self-use, referring to when consumers purchase gift cards to spend on themselves, is likely to see a similar boost. Self-use now represents 21.8% of consumer spend on gift cards – a value of just over £1 billion – however the proportion of shoppers who have bought gift cards to support local businesses are likely to boost this figure further in the coming weeks.

Gail Cohen, director general of the GCVA, commented: “Our members across the industry have responded fabulously to the challenges created by COVID-19; not only through enabling new ways of gifting, but also ensuring those in isolation could purchase essential goods, schools could feed their pupils and key workers received the recognition they deserve.

“Because of the industry’s swift action, gift cards have emerged as the nation’s payment solution of choice during this pandemic, offering a safe, socially distanced way to both show loved ones how much you care and support local businesses at a time when they need it the most.

“As we begin to emerge from a challenging period, we would urge anybody that has purchased a gift card either during lockdown or beforehand to get out there and enjoy them. After all, given gift cards’ proven worth in creating and retaining customer loyalty and additional spend, you’re not only treating yourself, but also supporting your favourite businesses – what’s not to love?”

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