In-store gift cards have long been a popular choice for consumers, offering convenience and flexibility for both givers and recipients. However, recent trends suggest a shift in consumer behavior, with fewer purchases and declining load amounts. As digital and virtual gift cards gain traction, the traditional gift card segment faces challenges in maintaining its relevance. While in-store gift cards still hold value, adapting to evolving preferences and market dynamics will be critical for their future growth.
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Data for today’s episode is provided by Mercator Advisory Group’s Viewpoint: 18th Annual U.S. Closed-Loop Prepaid Cards Market Forecasts, 2020–2025
The Decline of In-Store Gift Cards:
- There was a ~7% decrease in in-store gift card loads in 2020.
- Consumers loaded $146.4 billion onto in-store gift cards in 2020, down from $156.8 billion in 2019.
- A smaller percentage of U.S. consumers purchased in-store gift cards in 2020 and yearly loads were less.
- Mercator forecasts the total yearly load for a U.S. adult who purchases in-store gift cards to decrease by 1% into 2025.
- The 1% overall increase is driven largely by the increase in the U.S. population.
- Mercator believes traditional gift card loads are stagnating because consumers are moving to digital channels.
About Viewpoint
The report titled 18th Annual U.S. Closed-Loop Prepaid Cards Market Forecasts, 2020–2025 provides an analysis of the growth and development of the prepaid cards industry through 2025. The report examines loads, growth potential, and market dynamics in the United States across all closed-loop prepaid card segments.
Mercator Advisory Group’s forecast report identifies key segments that will continue to decline over the next few years as well as those that should see growth. The economy, regulation, consumer behavior, and the COVID-19 pandemic will all influence which segments grow and which decline. “The pandemic has affected closed-loop card loads differently by segment. Digital and virtual gift cards are forecasted to continue growth amid a booming e-commerce market. As the pandemic subsides and in-store foot traffic returns, in-store gift card loads will slowly come back, however, the consumer trend towards digital channels will remain, resulting in digital and virtual cards winning market share over time,” commented David Nelyubin, Senior Analyst of Mercator Advisory Group’s Prepaid Advisory Service, the author of the report.
