Physical gift cards are on the rise for the fourth year in a row, and it should be noted that when consumers shop with gift cards, 75 percent of the more mature shoppers overspend by an average $27.74, according to the 2016 Consumer Insights Study from First Data.
Furthermore, gift card shoppers don’t necessarily buy gift cards from stores they’ve previously shopped, making gift cards a retailer’s ticket to drawing in new customers and repeat business. After all, more than one-third of gift card recipients were prompted to visit a store they otherwise would not have gone to as a result of a gift card, and 48 percent were prompted to visit a store more often.
For its 2016 Consumer Insights Study, First Data surveyed more than 2,300 consumers over the age of 18, all of whom have purchased or received e-gift cards in the last 12 months. First Data broke up its participants by generation, labeling those ages 18-34 years old as “Socializers”; ages 35-54 as the “MTV Generation”; and those 55 years and older as “Maturists.”
Gift recipients are increasingly preferring gift cards over physical gifts, as noted by 72 percent of the participants in First Data’s survey. What’s more, more than half of the respondents were interested in reloading their gift cards, particularly if bonus bucks were added to the card. However, millennials were more greatly enticed by free items (as incentive for reloading cards) than those 35 years and older. Furthermore, consumers who earn less than $75,000 per year are more likely to be very or extremely interested in auto-reloading gift cards. Higher earns are less interested. Retailers ought to also note that consumers are interested in receiving electronic notifications (email, text messages, etc.) about special offers or their gift card balance from a merchant whose gift card they’ve stored in an app on their mobile phone (Socializers, 85 percent; MTV Generation, 80 percent; and Maturists, 67percent). Furthermore:
- 35 percent of gift card users would like their gift cards reloaded automatically (by setting it up online or through a mobile app)
- 50 percent across all age groups are at least somewhat interested in using an app to store gift card information on their phone
- 78 percent, generally speaking, are at least somewhat interested in email or text notifications about balance or special offers
Here are some additional highlights from First Data’s consumer insights:
- Socializers lean more toward purchasing e-gift cards online (45 percent) versus physical gift cards (30 percent). However, they purchase both e-gift cards and physical gift cards equally via specialty retailers (23 percent).
- The MTV Generation has increased its purchase of gift cards for self. In 2015, 30 percent of these consumers purchased physical gift cards for themselves versus e-gift cards (45 pecent). But in 2016, the percentages increased to 35 percent for physical gift cards for self, versus 53 percent for e-gift cards for self.
- Notably, fewer than 12 percent of purchasers have some interest in buying gift cards via social media sites like Facebook and Twitter. And fewer than 11 percent were likely to do so over the next 12 months.
More specifically, Maturists are most likely to overspend when making purchases using gift cards, as follows:
Specialty retail: e-gift cards, $87; physical gift cards, $62.50
Online: e-gift cards, $73; physical gift cards, $73.64
The following are some of the incentives that drive gift card purchases:
Bonus card: 30 percent
Discounts: 46 percent
Free Item: 10 percent
Consumers also purchase gift cards for themselves due to online shopping, discounts and loyalty or rewards incentives. More specifically, Socializers are more likely to purchase them due to online shopping (37 percent); Maturists are more likely to purchase them due to discounts (39 percent). And about one-third of all three segments (Maturists, Socializers and MTV Generation) are motivated to purchase them due to loyalty or rewards incentives.
Last, retailers may be curious as to the hesitation some shoppers have toward purchasing gift cards. For Socializers, the No. 1 reason is a fear that retailers won’t accept the card (54 percent), followed by security concerns (47 percent) and it being too complicated (38 percent). The MTV generation is most worried about security (51 percent), followed by it being too complicated (49 percent) and being afraid that retailers won’t accept it (36 percent). Finally, Maturists are more likely to be afraid that the card won’t be accepted (42 percent), followed by security concerns (34 percent) and the process being to complicated (33 percent).
[Image courtesy of First Data ]