Gift Cards are becoming more innovative while focusing on maximizing the customer experience. These popular giftable items are simple to give and redeem. Many successful independent retailers promote physical and digital cards to help their businesses stay competitive and attract new customers. Incorporating this turnkey niche into your strategic plan can diversify sales and foster loyalty.
The U.S. gift card market is projected to reach $447.1 billion in 2025, contributing significantly to retail sales. While physical gift cards remain popular, digital gift cards are proliferating, with an annual increase exceeding 26 percent. Consumers appreciate gift cards for convenience, with 52% purchasing them for that reason. Even better for retailers, many customers tend to overspend beyond the card’s value. By focusing on both the sale and the subsequent interaction, businesses can maximize the value of gift cards in their strategies.
“Gift cards come with a host of benefits for businesses,” said Mo Chaar, Chief Commercial Officer for digital payments firm Givex. ” They drive revenue growth, providing an immediate boost when the card is sold. There’s also the potential for an additional lift. Add to the fact that branded gift cards build brand awareness, introducing new customers to a business they would otherwise might not visit.”
Benefits of Promoting Gift Cards
Many Businesses currently benefit from gift cards, which can account for about 5% of their revenue and can be more effective than discounts as incentives. Customization options for gift cards are particularly appealing to millennials. Gen Z shoppers drive the demand for digital gift cards since they purchase them for personal use and gift-giving. Technically adapted generations of young consumers prefer immediate access to their cards from a digital wallet. As a result, sales of digital cards exceeded physical gift cards during the first 6 months of 2024. Here are just a few benefits of selling gift cards.
Revenue Generation: When purchased, gift cards provide an upfront cash flow, even before the goods or services are redeemed.
Customer Acquisition: Gift cards can attract new customers who might not have visited the business otherwise. When recipients redeem their gift cards, they often explore the store and may become repeat customers.
Reduced Returns: Gift cards lessen the likelihood of returns compared to traditional gifts. Recipients can choose exactly what they want, leading to higher satisfaction and fewer returns.
Increased Sales: Consumers tend to overspend beyond the gift card’s value. This means that businesses often see higher sales when customers use gift cards to purchase additional items.
Brand Loyalty: Offering gift cards can enhance brand loyalty. Customers who receive gift cards will likely have a positive experience and may return for future purchases.
Marketing and Promotion: Gift cards can be used as practical marketing tools. Businesses can offer them as incentives in promotions, contests, or loyalty programs, encouraging more engagement and sales.
B2B Gift Card Sales are Booming
The most profitable gift card sales are business-to-business transactions, representing 72 percent of total sales. Companies are purchasing gift cards in bulk to reward and motivate employees. “Many clients use gift cards as rewards and key parts of their incentive programs, so they purchase them in bulk. “Charr said. “That’s been a growing trend. It makes sense for them to do so because many employees prefer a gift card from an employer instead of an actual gift, because they can use the card to choose whatever they want.”
Programs Offered by Hardware Cooperatives
Retailers affiliated with Ace Hardware, Do it Best, and True Value can join gift card programs through their cooperatives or wholesalers. The goal is to generate sales and increase store traffic. The programs give individuals opportunities to purchase cards online or at local stores. Companies can also buy cards in bulk to distribute to their employees on special occasions. Both digital and plastic cards are available. Ace Hardware distributes physical cards through third-party retailers like Kroger, Giftcards.com, Amazon.com, and eGifter.
Selling Multiple Brands of Gift Cards
By now, most of us are familiar with the gift card kiosks set up in big box retailers, grocery stores, gas stations, and entertainment venues. Selling branded gift cards is competitive and requires store owners to partner with dedicated distributors who make it easy for businesses to enter the business and continually manage the process. Retailers who commit to selling gift cards realize their impact extends far beyond the point of sale. They also build meaningful connections with customers who come to your store to buy products and get knowledgeable advice.
