New data from prepaid card provider Blackhawk Networks shows the high demand for gift cards to fulfill shopper needs in the coming holiday season. Blackhawk’s announcement also indicates that newer shoppers lead the way on the current gift card trend:
“Reported increases in gift card spend are fueled by Gen Z shoppers’ love for gift cards. Younger generations surveyed plan to buy 70% more gift cards than older generations this holiday season. Surveyed Gen Z consumers also plan to spend 56% more on gift cards and 9% more on gifting overall when compared to last year.”
Javelin research and reporting on consumer preferences correlates with the Blackhawk findings that 43% of gift spend will be spent on gift cards. The Javelin 2023 Prepaid Holiday Preview, published in July, highlights the buyer preferences for gift carding as both a preferred gift to give and receive. Javelin’s research show that 26% of consumers prefer a general purpose gift card, one bearing the logo of a major credit card. An additional 21% prefer to receive a retailer specific gift card for use at their favorite store.
More importantly, consumer purchase preferences also back up the gift carding need. While reception spurs later use, purchases start the revenue cycle and actually determine which cards are bought and utilized. This changes the dynamic slightly, with retailer cards leading purchase preference at nearly 30%, closely followed by general purpose cards at nearly 25%.
Looking more closely at generational use, all generations follow similar preferences for both purchase and receipt of gifts. What separates generations in Javelin research would be intent to purchase additional prepaid cards products. Both Gen Z and Gen Y top 20% of total population intending to buy more gift cards than they did in the previous 12 months. As a comparison, while older generations also intend to purchase more gift cards, only 9% and 6% of those in Gex X and Baby Boomer generations—respectively—intend to purchase more.
The growth in gift carding among younger generations also points to the continued shift towards digital gifting versus physical cards. Comparing the polar ends of the generational spectrum, Gen Z will receive 30% more digital cards on average compared to Baby Boomers. Conversely, Gen Z will receive 30% fewer physical cards than Baby Boomers. The digitization movement should continue to expand in the coming years with the holiday season serving as a major inflection point to a leveling of gift carding from 70% physical to closer to a 50-50 split by the end of the decade.
Overview by Jordan Hirschfield, Director of the Prepaid Advisory Service at Javelin Strategy and Research.
