The gift card market continues to grow fast and is therefore of vital importance to sectors like fashion and beauty. A new study from the Gift Card & Voucher Association (GCVA) and GlobalData has revealed that the estimate for the UK gift card market’s value has grown by almost £1 billion since its last valuation.
Following the new study, it’s now said to be worth £6.9 billion after being valued at £6 billion in 2019. That’s a huge uplift, particularly given the wider retail sector headwinds.
And the body expects values to grow and reach £8.71 billion by 2025 – an increase of almost 25% – which is set to be driven by the rapidly-growing B2B gift card market.
The buoyancy of the sector is being driven by the move to digital but also by more gift cards being given for leisure rather than to simply buy products, as well as by that thriving B2B sector.
That said, retail gift cards continue to dominate the market, representing just over 60% of total spend (£2.8 billion). However, multi-store gift cards have also seen a rise in popularity, representing just over 17% of consumer gift card spend in 2019.
The GCVA’s 2019 research also found that 40.2% of shoppers had purchased a multi-store gift card last year, up from 37.5% in 2017.
Meanwhile digital gift cards now make up 36.5% of the overall market for gift cards bought for and by consumers. The overall report, which based its findings on a survey of 2,000 UK consumers, said that the digital focus reflects a number of trends, including a general move towards digital and rising consumer awareness around sustainability.
The study also said it’s Generation X (age 35-54) that buy gift cards of any type the most. They make up 37.7% of the market. This is followed by Baby Boomers (age 55+) at 37.1% and then younger demographics (age 16-34) at 25.1%.
Gift cards aren’t only about offering consumers a different way to spend though, and the GVCA said they play an increasingly important role in boosting customer engagement. In fact, 59% of respondents are being introduced to a new brand for the first time after receiving a gift card for that brand. And when they discover that new brand, they go on to spend an additional 35% above the gift card value. That makes them important marketing tools.
Gail Cohen, director general of the GCVA, commented: “Gift cards are an invaluable customer loyalty and engagement tool. If this latest research shows anything, it’s that retailers and other businesses looking to attract and retain customers simply cannot ignore gift cards any longer, with their importance and relevance to consumers only growing over time”.