Gift cards continue to gain favour (Survey)

But, retailers can get even more out of their gift card programs

While gift cards often get a bad rap for being an impersonal gift, Canadians can’t seem to get enough of them.

The 2015 Canada Gift Card Survey from prepaid and payments company Blackhawk Network found 87% of respondents have both purchased and received gift cards in the last year, up from 68% in 2010.

More than half of respondents (53%) who purchased a gift card in the past year bought four or more cards, and 76% said they would prefer to receive a gift card from one of their favourite stores rather than a specific gift.

“There certainly is a bit of a knock about the impersonality of gift cards, but more and more Canadians are embracing gift cards,” said Steve Dekker, managing director of Blackhawk Canada. “If someone does have a reservation about giving a gift card, it quickly goes away when they see the recipient’s reaction to it.”

According to the survey, 81% of respondents think gift cards are a good gift. Most Canadians (83%) like receiving gift cards because they can purchase what they want, and purchase something for themselves without spending any extra money (82%).

On the gift-givers side, a majority of Canadians (73%) prefer to give gift cards so the recipient can choose what he or she wants, and like to purchase gift cards because they are easier/more convenient to purchase than other gifts (65%).

The survey also found some gift-card givers are ditching the plastic in favour of e-gifts. Thirty-three percent of respondents purchased an e-gift in the past year, up from 26% in 2014, and 38% said they were likely to purchase an e-gift in the next year. In addition, 59% said they would be interested in receiving an e-gift in the coming year, up from 43% in 2014.

The top reasons for purchasing e-gifts are: they are easier to redeem (33%), offer immediate delivery (32%) and are easier to purchase (23%).

“E-gifts in both Canada and the U.S. is still sub-1% of the overall gift card market… but we do believe it will hit mainstream eventually,” said Dekker. “One of the reasons people like e-gifts is it’s the ultimate in convenience for gift-giving… You can be on a streetcar in Toronto and email a gift card to a friend in Vancouver.”

E-gifts also open up new possibilities for gifting, such as micro-gifting, added Dekker. For example, from a mobile device, “you can send a $5 Starbucks card to your neighbour who took your son to hockey. That’s a new way of gifting that hasn’t really been done before.”

And, while gift cards practically sell themselves, there are ways retailers and brands can get more out of their gift card programs. To start, they should look at gift cards as a customer acquisition tool, since any people who give gift cards are a fan of the brand and think the receiver should also be a fan, said Dekker.

“We do know through our research and certainly anecdotally, that a lot of people who receive a gift card from a specific retailer or dining establishment have never shopped or been at that establishment before,” he said.

“If retailers [realize] that gift cards are going to net new consumers, they will be very aggressive in ensuring their gift card is top of mind and that there’s some incentive for the consumer to give that as a gift.”

In addition, retailers should offer low-value gift cards to drive foot traffic as well as new customers. “A lot of retailers are heavily discounting a $10 card, or even giving away a $10 card to drive foot traffic because they know when you come into the store or restaurant, the basket will be $50 or $60,” said Dekker. “In an e-gift environment, that is far easier to do and highly effective.”

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