Hear those sleigh bells ringing? Holiday shopping is revving up early this year, and gift cards are topping many lists. New research from Fiserv reveals consumer spending trends that could affect merchants' busiest season.
According to the bimonthly Gift Card Gauge survey from Fiserv, 56 percent of consumers plan to start their holiday shopping before November, and 61 percent won't complete their holiday shopping until December. The expanded shopping season may lead to increased sales, with 26 percent of consumers planning to spend more this holiday season than in 2020.
"The economy is rebounding, along with consumers' spending habits," said Tom Niedbalski, vice president, Gift Solutions, Fiserv. "But the pandemic may have permanently changed some of the ways people shop and spend."
More than half (56 percent) have made most of their purchases with online-only merchants this year, and 69 percent say they're shopping more online because of the coronavirus delta variant. When shopping in person, 27 percent are using BOPIS – buying online, picking up in store – more often.
A Preference for Gift Cards
Wherever they shop, consumers are showing a preference for gift cards. Retailers are taking note, Niedbalski said, and updating mobile applications and digital storefronts to promote convenience and frictionless gift card experiences. That may mean adding the capability to automatically reload a mobile app's stored value, he said, or presenting a gift card promotion at the point of sale.
Fifty-eight percent of consumers prefer to give physical gift cards during the holidays, up from 42 percent in 2020. The same percentage (58 percent) prefer to receive physical gift cards, up from 39 percent in 2020. And those gift cards may be more valuable this year. Twenty-three percent of consumers expect to add $50 to $1000 on the cards they give, up from 18 percent who said they planned to add that amount in 2020.
Where are consumers purchasing their gift cards? Online-only merchants top the list (35 percent), followed by discount stores and big box retailers (21 percent).
As commerce shifts to digital, gift card preferences are evolving. The survey found 53 percent of consumers have made a purchase with a gift card stored in a digital wallet. And 42 percent use a digital wallet to house a gift card, which makes it the third most common payment type used within a digital wallet, behind credit cards (56 percent) and debit cards (55 percent).
"The digitalization of gift cards doesn't affect traditional gift card programs," Niedbalski said. "Providing online and in-store options offers growth opportunities and added value for merchants and greater convenience for consumers."
Providing online and in-store gift card options offers growth opportunities and added value for merchants and greater convenience for consumers.
– Tom Niedbalski, vice president, Gift Solutions, Fiserv
Give Them What They Want
Employees like gifts, too. Companies that reward their employees may have the inside track on retaining and motivating their workforce. Gift cards provide an easy, popular option for year-end recognition of employees and business contacts.
Eighty-eight percent of consumers believe gift cards make an appropriate business gift or reward, and 70 percent prefer gift cards over rewards of equal value. Prepaid cards (48 percent) and online-only merchants (20 percent) are the most preferred gift card types for employees.
While they aren't new to businesses or consumers, Niedbalski said, gift cards are evolving to meet people where they are. And that means added digital convenience for consumers and increased sales, brand awareness and customer loyalty value for merchants.