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What Do They Want? Gift Cards! When Do They Want Them? For Christmas!

By Sue Brown
October 28, 2019
in Analysts Coverage, Merchant, Prepaid
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What Do They Want? Gift Cards! When Do They Want Them? For Christmas!

What Do They Want? Gift Cards! When Do They Want Them? For Christmas!

A recent article in Retail Dive is worth a read:

  • According to a National Retail Federation (NRF) report released Thursday, consumers anticipate spending an average of $1,047.83 during the holidays, an increase from $1,007.24 (4%) last year. The survey of nearly 7,800 consumers found that shoppers anticipate spending an average of $658.55 on gifts for loved ones; $227.26 on non-holiday gift items like candy, food and decorations; and $162 on other non-gift purchases to take advantage of deals and promotions during the holiday shopping season.

  • Per the report, 70% of shoppers said that sales and discounts are the most significant factor in selecting a retailer, followed by 59% who said the quality of merchandise and 57% who named merchandise selection as an important factor in selecting a retailer.

  • As for the items consumers seek the most, the report also found that 59% of consumers want gift cards, followed by 52% who want clothing and accessories and 35% seeking entertainment gifts like books, movies, music and video games.

All of these are great points that depict why closed-loop, in-store gift cards are one of the largest prepaid segments, the one familiar to most people. Mercator Advisory Group recorded growth of 3% in this segment in 2018, up to $95.7 billion.

Mercator forecasts a 3% compound annual growth rate (CAGR) in this segment through 2022, when loads will reach $107.7 billion.

The NRF’s findings on how much consumers plan to spend is higher than other research, including Tinuiti’s findings that consumers plan to spend more than $500 and The NPD Group’s forecast of a little more than $700. The NRF survey also found that 73% of consumers will use their smartphone or tablet to shop online; mobile video ad network AdColony’s survey published a similar finding.

The survey findings also point to younger shoppers as the source for holiday shopping growth, because they’re purchasing goods for friends and colleagues. Per the report, more than half of shoppers ages 25 to 34 (52%) expect to buy gifts for co-workers, and 82% of shoppers between 18 and 24 plan to purchase gifts for friends.

Though the NRF has predicted a strong holiday season, it’s not clear whether consumer debt and the impact of tariffs on merchandise costs will drag consumers out of the holiday shopping spirit.

“Consumers are in good financial shape and willing to spend a little more on gifts for the special people in their lives this holiday season,” NRF President and CEO Matthew Shay said in a statement. “Retailers are fully prepared to meet the needs of holiday shoppers looking for that perfect mix of sales, quality and selection.”

As a consumer, be on the lookout during peak season for additional discounts that come with the purchase of a gift card. Sometimes it’s additional merchandise or bonus dollars to try a digital gift card rather than a physical one.

All in all if consumer confidence stays at 92%, retailers can expect a robust holiday season especially as it relates to gift card sales!

Overview by Sue Brown, Director, Prepaid Advisory service at Mercator Advisory Group

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